The cost of financing a home could remain prohibitive for many households in California as a result of a federal agency’s decision to keep conforming loan limits at $417,000.
Colleen Badagliacco, president of the California Association of Realtors, said homeowners in the state are being “shortchanged” as a result of the decision to not raise the conforming loan limit by the Office of Federal Housing Enterprise Oversight. The $417,000 limit, set in 2006, is the maximum size of a mortgage that Fannie Mae and Freddie Mac can buy or guarantee.
“By leaving the conforming loan limit unchanged, home buyers in California are being shortchanged,” she said. “The median price of a home in California exceeds the national median by 79 percent, yet California is not recognized by (Oversight office) as a ‘high-cost’ state.”
“Alaska, Hawaii, Guam and the U.S. Virgin Islands are recognized by OFHEO as ëhigh-costà areas,” she added. “Surely California deserves the same consideration. California 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.”
“California has the second lowest rate of homeownership in the nation, where even the most “affordable” parts of the state have home prices in excess of $300,000,” Badagliacco explained. “Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan, increasing the monthly payment and negatively impacting affordability for households in California.”
