Will the new $1M+ loan limit help boost sales?
If you hadn’t heard, the Federal Housing Finance Agency (FHFA) announced last November that it would be raising the conforming loan limits in 2023. While the standard maximum value for one-unit properties across the country increased to $726,200, high-cost areas like New York City now have a maximum loan value of $1,089,300. This is the first time the loan ceiling limit for one-unit properties has surpassed the $1 million threshold.
Buyers looking to finance can now expand their search to include NYC properties that may have been a little over their budget, without the need to apply for a jumbo loan. Of course, I always recommend to clients to exercise caution when determining the amount they want to borrow. Buyers should carefully consider how much they want to finance without stretching themselves thin and putting themselves in a position of being cost-burdened. As I’m sure many of you know, there are pros and cons to securing these loans.
Although 55 percent of Q4 sales last year were "all cash" deals due to increasing interest rates, there is still a good percentage of buyers financing. This FHFA loan limit increase will hopefully help generate more sales, giving the market a bit of a boost. If the StreetEasy predictions for 2023 are anywhere near accurate, then we can expect buyer demand to slow down which in turn may push sellers to reduce their asking prices, albeit slightly. So if you’re not in a hurry to buy, you may want to monitor the market for a bit before making a decision.
In fact, there are so many factors to consider when buying a home, which is why I always advise clients to approach things smartly and slowly. My Buyers Guide is always a good starting point, and I also have a trusted network of mortgage professionals who I can refer you to if you have questions about financing. While the news of the loan limit increase may be encouraging for some, I recommend doing a little more research before jumping in with both feet. Please reach out if you have questions.