Government to Back Mortgages Up to $970,800 in 2022

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The Federal Housing Finance Agency announced This Week in Real Estate the baseline conforming loan limit for 2022 will be $647,200, an increase of 18%. Additionally, for “high cost” areas, those in which 115% of the local median home value exceeds the baseline conforming loan limit, the applicable loan limit will be capped at $970,800. Below are a few newsworthy events from the final days of November and first days of December that influence our business: 

2022 Housing Outlook. 2022 should be a strong year for housing. Look for mortgage rates to rise but remain historically very low, home sales to grow to a 16-year high, price and rent growth to slow, refinance to shift toward cash-out, and delinquency rates to remain low albeit with an uptick in distressed sales. With the Federal Reserve gradually “tapering” its supportive monetary policy, mortgage rates should slowly rise in the coming year: look for mortgage rates to average about one-half of a percentage point higher in 2022 than they were in 2021, or about 3.4%. We expect to see a moderation in buyer demand as the erosion in affordability takes a toll, and additional for-sale inventory to come on the market. With more supply from new construction and existing owners relocating, home sales are expected to rise to the largest number since 2006. With less demand, we expect homes listed for sale will be on the market a bit longer with fewer competing bidders, which should moderate price growth. The CoreLogic Home Price Index Forecast has the annual average rise in the national index slowing from 15% in 2021 to 6% in 2022.

2022 Conforming Loan Limits Rise 18 Percent to $647,200. The Federal Housing Finance Agency (FHFA) today announced the baseline conforming loan limit for 2022 will be $647,200, an increase of 18%. The federal government will now back mortgage loans of nearly $1 million, with the new ceiling loan limit for one-unit properties in most high-cost areas now $970,800 – or 150% of $647,200. In 2021, the FHFA set the baseline conforming loan limit at $548,250, a 7.5% increase from the prior year. Over the past six years, the baseline loan limit has risen $230,200. Median home values exploded across dozens of housing markets across the country in 2021. In the third quarter, the FHFA announced that its house price index saw the largest increase since the metric was introduced in 2008. House prices increased 18.5% across the nation, while some markets saw even larger increases.

Housing Inventory Has Never Been Lower. The number of active listings hit an all-time low during the week ending November 28. During the four week period ending November 28, the number of active listings was a 23% decrease compared to the same time period in 2020 and a 42% drop compared to 2019. The number of new listings was also down compared to 2020, dropping 4%, but it was 12% higher than the number of new listing during the same time period in 2019. Despite the seasonal changes going on outside, demand remains strong. During the same four week period 45% of homes that went under contract had an accepted offer within the first two weeks, up from 39% in 2020. But perhaps even more impressively, 33% of homes had an accepted offer within one week, up from 27% a year prior. Overall, the median number of days a sold home sat on the market during this period was 25, as compared to 31 days in 2020 and 46 days in 2019. Ever-tightening housing inventory and steady demand has resulted in median home sale prices hitting a new all-time up of $360,375, just two weeks after hitting another all-time high. This marks a 14% year-over-year increase and a 31% increase from 2019. In addition, 43% of homes sold during this period, sold over list price, with the average sale-to-list price ratio coming in at 100.5%.         

                                                                         

Did you know every home listed for sale with Berkshire Hathaway HomeServices Northwest Real Estate and Berkshire Hathaway HomeServices Real Estate Professionals are eligible to receive no-obligation home warranty coverage from American Home Shield or 2-10 Home Warranty the first six months the home is listed with our company?