The Buzz: Scottsdale Real Estate

Temporary Conventional Loan Limit Increase for Fannie Mae and Freddie Mac

HR 5140, the Economic Stimulus Act of 2008, has passed through the House and the Senate and is awaiting the President’s approval.  This bill could have some very positive effects for home buyers and sellers.

What does this mean to the home buyer?  Loans that conform to Fannie Mae and Freddie Mac loan limits have significantly better interest rates.  The increased loan limit could definitely inspire more home buyers to take action as it will make home ownership in the higher price ranges more affordable. Let’s hope it works.

I’ve heard the phrase "getting the market unstuck" and that seems appropriate.  Policy makers believe that the increase in the conforming loan limit will open up the market to more homebuyers and I certainly hope they are right as the average home price in Scottsdale is significantly higher than the current limit of $417,000. (See table below for current home prices in Scottsdale) 

HR 5140 itself doesn’t determine the new limits however it does state that these limits are temporary.  The window of opportunity will end December 31, 2008 according to this bill.  I believe the new limits will be set by the Secretary of Housing and Urban Development and I have heard that the limits will be as high as $635,000 to $730,000.

This is a huge increase by normal standards.  The annual increases are historically minimal.  In 2002, the limit was $300,700, and the increases through 2005 were between $10,000 and $25,000 annually.  The last increase in 2006 of $57,350 brings us to the current limit of $417,000.  An increased limit of $730,000 is $313,000 or 75% higher than the current limit. 

Prices of Scottsdale Single Family Homes for Sale