What Places Will Receive the Biggest Loan Limit Boost?
- Mar 06, 2008
Many taxpayers are focused on the rebate check that will be sent this spring, courtesy of the Economic Stimulus Act–but the provision’s cash-back policy isn’t the biggest benefit for homeowners living in high-cost areas.
The act also raised loan limits until the end of the year for Freddie Mac, Fannie Mae and the Federal Housing Authority. Freddie Mac and Fannie Mae can now back loans of up to $729,750 until Dec. 31; the FHA can insure loans of up to 125% of an area’s median home price (up to $729,750.)
For places like Northern California–where homes way more expensive than the previous Freddie Mac and Fannie Mae $417,000 limit and the $362,790 FHA limit for high-cost areas–that’s likely to make a big difference for homeowners looking to refinance and home shoppers looking to buy.
Which is, of course, what the entire housing market is hoping for–more refis to help save homes facing foreclosure and more sales to pull stock off the bloated housing inventory.
The loan limits will differ across the country; the Department of Housing and Urban Development is supposed to publish a list of median area home prices by March 14 so that the new FHA, Freddie Mac and Fannie Mae caps can be determined.
Yesterday, HUD announced the new regional loan limits for California. The other limits are expected to be announced soon.
Until we know the new limits, everyone is speculating what areas will be most affected. Forbes.com has put together a nifty list. Curious? According to Forbes, the following areas will see the biggest change:
- San Jose, Calif. With a median home price of $720,000, the San Jose limit is expected to rise to the $729,750 maximum. Forbes estimates more than half of the metro area homes will be eligible for the agency-backed loans.
- San Francisco. The city should get the highest new limit since its median home price is a whopping $680,000. About 44 percent of the homes will be affected, according to Forbes.
- Los Angeles. More than 32 percent of the homes in the LA area–with a median price of $560,000–should get a new limit of $700,000, which will be a bonus since the area has been subject to a large number of foreclosures.
- San Diego, Calif. About 18.4 percent of the San Diego-area homes should receive higher limits. The area cap should be around $587,000, Forbes says, which is more good news for the region, which saw home sale volume increase in December.
- New York City. The Manhattan market hasn’t suffered as much as the rest of the country, but its high prices kept many homebuyers from meeting the FHA, Freddie Mac and Fannie Mae limits. Forbes estimates the new limit will be about $581,250, which should help out more than 17 percent of the area homes–especially in the condo market in the
outlying boroughs, Long Island and New Jersey.
- Washington, D.C. D.C.-area homes have an average median price of $409,109; Forbes thinks the new limits will top $511,000 and affect almost 11 percent of the area properties.
- Sacramento, Calif. Just 3.1 percent of the homes in Sacramento will be affected by the new limits, which Forbes says will be about $450,000, because the lower limits weren’t much of an issue–but foreclosure rates, excessive building and bad loans have been, which may make it hard to turn this market around.
- Seattle. With a median area home price of $354,950, Seattle may get limits as high of $443,688, affecting 2.6 percent of Seattle residential properties, Forbes says. Seattle sales are expected to still be slow, however, due to the high spikes in home prices in the past few years.