Property prices have increased significantly in the past couple of years and, despite a recent noticeable deceleration since August, they remain higher than they have ever been. According to the latest S&P CoreLogic Case-Shiller U.S. National Home Price Index, property prices in all nine U.S. census divisions increased by 10.4% in September in a year-over-year comparison.
As home buyers contend with the combination of high property prices and rising interest rates, the real estate market nationwide is cooling rapidly. The National Association of Realtors reports that existing-home sales have fallen for nine straight months through October and that buying a house still remains unaffordable for many households.
Conforming Loan Limits Increased
To coincide with higher home prices, the Federal Housing Finance Agency (FHFA) announced that it would increase the conforming loan limit values (CLLs) for mortgages to be acquired by Fannie Mae and Freddie Mac in 2023.
The new loan limits were calculated annually using a formula that factors in average housing prices. Most of the country will see their CLL climb from $647,200 to $726,200 for single-unit properties. Higher-priced areas, as well as Alaska, Hawaii, Guam, and the U.S. Virgin Islands, will have a new ceiling loan limit of up to $1,089,300, breaking the one million dollar limit for the first time. These higher priced areas include coastal California and the greater metropolitan areas of Boston, New York City, Washington D.C., Nashville, Seattle, Denver, Nashville, and Jackson, WY.
The new loan limit will allow borrowers to purchase more expensive properties using conforming loans, which come with lower closing costs and can require a smaller down payment, instead of jumbo loans that typically have more stringent borrowing requirements.
Rates Drop 3rd Week in a Row
“Mortgage rates continued to drop this week as optimism grows around the prospect that the Federal Reserve will slow its pace of rate hikes,” said Sam Khater, Freddie Mac’s Chief Economist. “Even as rates decrease and house prices soften, economic uncertainty continues to limit homebuyer demand as we enter the last month of the year.”
We’ll keep you updated on further developments. In the meantime, if you’d like more information about buying/selling or refinancing in today’s market, give us a call or drop us an email.
