While a housing market recovery isn’t exactly imminent, there have been some rays of hope in recent months.

For some, there’s the extension and expansion of first-time homebuyer tax credit legislation. While we didn’t (and still don’t) exactly advocate for such an expansion, given the fact that the market’s gradual success could perhaps give us false hope and lead to disappointment once the feds remove the crutch in June, for many the news was received with much fanfare.

But we can get behind what is perhaps one of the government’s quietest, and arguably smartest, moves to date – the extension through next year of the higher maximum dollar amount for single-family conforming loans.

Federally-backed Fannie Mae and Freddie Mac have a general rule of $417,000 on loans they will agree to purchase, thus giving a better interest rate on such lower-risk loans. The government has made an exception for areas deemed “high cost,” to include mortgages up to $729,750. Congress initially threatened to lower the limit to $625,500 at the end of the year, but gave both buyers and sellers in affluent areas a break by extending the higher limit for another year.

Now, borrowers in certain high price-areas – however few of them – will be given a better option instead of taking out risky “jumbo” mortgages at a higher interest rate. Locally, home sales in nine Massachusetts counties will likely benefit from the implications of this raised ceiling.

Extending the higher loan limits for Fannie Mae and Freddie Mac through next year is a step in the right direction toward a sustainable housing recovery. There are ways to increase affordability and maximize profits for both buyers and sellers. Allowing for more conforming loans could help restore liquidity to mortgage markets.

Congress made the right decision in extending the higher limit. Lowering the parameters of high-end mortgages could bring us back to the height of the credit crunch, when larger mortgages virtually froze. Pricey real estate markets have been, and still are, dampened. This extension could help restore some confidence and stabilize the expensive areas, and in turn, the overall real estate market.

While the country waited anxiously to see if the homebuyer tax credit would be extended, there was little discussion about the extension of higher conforming loan limits. But buyers waiting on the $8,000 tax credit have been given an even greater gift with the broadening of conforming loan limits. They’ve been given more time to seek and gain approval for government loans, which will undoubtedly allow more loans to qualify and will keep mortgage credit more accessible and affordable.

Although home sales have inched up in the past few months, inventory is still bloated. Widely-published reports show sales in affluent areas are suffering nationwide. Middle- to high-priced homes must sell in order to breathe some more life into the market. This extension, coupled with the homebuyer tax credit, will likely entice buyers to purchase a home next year in the areas hurting most.

The National Association of Realtors lauded Congress for pushing the conforming loan resolution along. But the decision is popular among more than just those profiting in real estate. Unlike the homebuyer tax credit, raising the loan limits won’t cost taxpayers a dime. It’s a win-win situation.

Rather than placing an $8,000 premium on a home’s selling price, property in high-cost areas can remain priced to its true value. Rather than lowering the selling price to $625,500 to fall within the conforming loan standard, and thereby attract more buyers, sellers actually have a shot at making money.

Jumbo borrowers have been scared away with high interest rates, the prospect of coming up with higher down payments and the pressure to sustain higher cash reserves. Now, those in the market to buy a home in a high-priced area can do just that, without being penalized.

The loan extension is just what the market needs – a vote of confidence. If such changes prove successful, we would advocate for the extension to go beyond next year – and maybe even remain permanent.