If the Fannie and Freddie conforming loan limit in 1980 had only been increased by the rate of inflation, the limit at the peak of the bubble in 2005 would have been $280,000 instead of the actual limit which was $450,000 (in 2017 dollars).

Would the real estate boom have gotten as large as it did, if the loan limits weren’t increased significantly more than inflation over all those years? More stable real loan limits would have likely led to more stable home prices and a smaller real estate bubble.

The article is written by John Wake for Forbes. You can read the full article here.