Limited loans
HOMEBUYER SQUEEZE: Californians face housing market doube whammy: High prices, fewer loans. Got lots of cash?
The cost of financing a home remains out of reach for many households in California in the wake of the Office of Federal Housing Enterprise Oversight (OFHEO) conforming loan limits for 2008, announced today, according to the Los Angeles-based California Association of Realtors.
The maximum 2008 conforming loan limit for single-family mortgages will remain at $417,000, unchanged since 2006. The conforming loan limit determines the maximum size of a mortgage that Fannie Mae and Freddie Mac can buy or guarantee. Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan, increasing the monthly payment and diminishing affordability for households in California.
"At more than $568,000, the median price of a home in California is more than 2.5 times the the U.S. median of $221,000, yet California is not recognized by OFHEO as a ‘high-cost’ state," said C.A.R. President William E. Brown. "California still has the third highest home price in the nation, compared with Hawaii at seventh, and Alaska, which ranks 39th in terms of median home price. Yet Alaska, Hawaii, Guam and the U.S. Virgin Islands are recognized by OFHEO as ‘high-cost’ areas.
"With a 20 percent down payment, the highest-priced home one can buy with a conforming loan in California
is $521,250, $44,750 below the third quarter median price of $568,130," he said. "Fifty-five percent of all home sales in California exceeded the $521,250 threshold in the third quarter. With a 10 percent down payment, even fewer buyers can qualify for a conforming loan.
"Now is the time for the U.S. Senate to pass legislation allowing regional adjustments to Fannie Mae and Freddie Mac loan limits and to modernize FHA loan programs," Brown said. "This critical
legislation is a key step to allowing families in California an opportunity to climb the first rung of the homeownership ladder."
For more information: CAR Web site