Eldad Moraru

Your Personal Realtor

NEWSFLASH – Congress restores higher FHA Loan Limits

In my blog post June 23 regarding Congress lowering FHA loan limits I discussed the negative effect this move would have on the housing market in general, read the full post here. Well it would appear that congress has voted to restore the higher FHA loan limits which in our area would be up from $625,500 to $729,750.

These FHA backed loans will enable buyers to put as little as 3.5% down on a the purchase of a home. While I know to many this sounds like a benefit just for the upper echelon of wage earners keep in mind that our area is ranked pretty high up on the list of costly housing markets.

Also, keep in mind that many in this price point are either move up or move down buyers. Each segment of the market is dependent on the other segments of the market. What I mean by that is those sellers who are selling to first time buyers are moving up to their next home which most likely puts them in this sweet spot. If they are unable to afford to move up they will not be able to sell their home which would dry up inventory for first time buyers. By the same token if the sellers of these mid-range homes have buyers who cannot afford to buy their homes they in turn cannot move up or down for their next purchase.

So in essence both the upper bracket market and the first time buyer market are heavily affected by the ability and affordability the mid-market is experiencing. I applaude Congress for doing the right thing. It was not an easy decision but in personal opinion it was the right one.