Reduced Conforming Loan Limits - How Will It Effect San Francisco Real Estate?

Three years ago to stimulate the real estate market on the precipice of a recession, the federal government passed the Housing and Economic Recovery Act of 2008. This raised the limit on conforming loans from $417,000 to $729,500 backed by the FHA, Fannie Mae and Freddie Mac and these included lower interest rates and loosened up qualification requirements. Originally the plan was to lower the ceiling in 2009 but due to successful real estate lobbying it was extended to September 30, 2011, which will be the expiration date. The following day the conforming loan will be $629,500, a 14% decrease in buying power which could have a profound effect on Californians. This will reduce home buying power from $915,000 to around $790,000. This could have an effect in San Francisco housing market for some condominiums and many single family homes which exist in some of the more highly desirable neighborhoods, like Bernal Heights, Glenn Park, Sunnyside, the Avenues and many neighborhoods where the median home price is above $790,000. Perhaps we will start to invoke more creative financing to cover the difference such as HELOC loans, seller financing or 2nd mortgages.

Perhaps this is another reason why now is a great time to buy a home. Call me if you you want to get started, I am ready. Lots of opportunities available.