FHA Loan Limit Increase

On March 6, 2008, new FHA loan limits went into effect. I know this post is outdated by a few weeks, but I want to blog about it since it does hold some significance to Staten Island buyers. The real estate market is so diverse across the country, so what you read about in the news may not directly apply to New York. Here is a table explaining the new FHA Loan limits revised 3/5/08.

• One-Family = $729,750.00
• Two-Family = $934,200.00
• Three-Family = $1,129,250.00
• Four-Family = $1,403,400.00

One important thing to point out is that this is a temporary course of action. The Economic Stimulus Act of 2008 mandated that the limits be recalculated, which they were. However, these limits are in affect only until December 31st, 2008. Senator Clinton has proposed the 21st Century Housing Act in an effort to create a long-term fix.

Basically, this news means that a borrower on Staten Island will have more options now. Those costly jumbo-loans will become less prevalent as government back loans take their place. If you previously intended on borrowing between $417,000 and $729,750 for a home but found it too costly, this is good news as you have a new option to explore.

What do I make of this?

1. I strongly believe that we will see an increase in home sales starting in the third quarter of 2008. Buyer’s and seller’s will regain confidence when affordable loans are more readily available.

2. I predict that the median sale price will also increase. You will see more homes in this new price window being purchased.Contrary to what many believe, the median sale price only fell slightly. In fact, 2-Family Detached and 2-Family Semi’s saw an increase in median sale price.

3. The 21st Century Housing Act will pass into law long before elections roll around in November. Since the details are specific it’s hard to say if this is good or bad. Time will tell.

Are these off the wall predictions? Hardly. But I’ll revisit them in a few weeks and see if they hold any truth.