The past few weeks have been fraught with hysteria, calamity, fear and anxiousness. We could all use a little good news couldn’t we? I believe one of the factors that will bring health and balance to our Eastside market is the resizing of the Jumbo Loan… actually the fact is that the conforming loan is getting bigger. Allow me to explain.
Prior to the first stimulus package the maximum loan amount for a confirming rate was $417,000.00. When the Congress and the President signed the first package there was a temporary ceiling (expiring December 31, 2008) on the maximum to $567,500.00. The investors didn’t feel the kind of confidence (due to the climate we were in) required to offer the rates that the lower price loans would receive, so there actually became a third tier—Conforming Jumbo. Now that the second stimulus package has been passed, there is a new permanent loan limit. For King, Pierce and Snohomish Counties it is now $522,100.00.
This is exciting because the median home price in our counties is certainly above the $417,000.00 limit. Those buying a home with conforming loans will receive not just better rates but better terms as well.
The trickle up effect this will have is a fundamental in inventory being absorbed. Considering the fact that there is now over a $100,000.00 increase in the ceiling that will assist those that should be buying in our median price range, this will give them the ability not to overstretch, but find reasonable monies to fulfill their housing objectives.
As we pray to see our young men and women come home from the conflicts in the middle east soon. In the past, those service men and women, using their V.A. (Veteran's Administration) loans were forced to live farther out due to the maximum limits as well. As they return home, they will also have the opportunity to take advantage of the new higher loan limits.
As the more affordable price points see sales increase it will help absorb the upper-end price points. That’s an effect we can use.
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