As I noted before, one of the current issues most affecting our market is the drop in mortgage loan limits for conventional financing as of the end of 2008. This is dramatically hurting home sales and trade-up activity in higher price ranges. According to NAR, the National Association of Realtors, “The latest existing home sales data shows transactions under $400,000 are 3 percent below a year ago. However, sales of homes priced at $750,000 or more have declined a whopping 47 percent.” Buyers who need jumbo mortgages must pay interest rates that are nearly 2 percentage points higher than conventional financing; as a result, the high-end market is very slow and buyers in higher price ranges are at a severe disadvantage.
Currently NAR is pushing for the permanent increase of mortgage loan limits to that $729,750 cap. According to a statement released this week by NAR, “To illustrate in dollar terms if mortgage limits are permanently raised to $729,750…the mortgage payment on such a loan would drop by $942 per month by lowering interest rates 2 percentage points. Over the life of a 30-year loan, the homeowner would save $338,000.”
Especially here in our market, we need the increased loan limits so people in all prices are able to purchase. Every segment of the housing market needs a turnaround to spark an overall housing recovery.
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