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What is the FHA Thinking?

By
Real Estate Agent with Crown Key Realty

 

As almost every Realtor, I have done many transactions in which the loan was guaranteed by the FHA. Most of the transactions went smooth, sometimes a touch slower that I would have like, but in every case the transaction was completed. All was well until the calendar flipped onto 2014.

 

Brief History Lesson

The Federal Housing Authority or FHA was founded, by congress, in 1934 when the American housing industry was flat on its back bad. In 1965 it was made a part of the Housing and Urban Development Dept. or HUD. Since that time it has insured loans for than 34 million properties, making it the largest loan insurance company in the world. I'd call that a very successful organization. Until now.

I do most of my business in Tracy Ca. in San Joaquin county. In 2013, FHA set loan limits for our county at $417,000. That worked for the large majority of our buyers and sellers. Our market did great. When the calendar flipped to 2014, the loan limit rolled back to $304,750. Really? Yes really.

 

Today's Numbers

A quick look at the numbers in Tracy will explain my issues with the FHA. Looking at conventional sales and short sales we have 191 available properties. The median price of those 191 properties is $399.950. So much for FHA. Of the available properties today 30 are with the FHA price guide lines.

Today our market has movement but it has slowed substantially. If we could revert to 2013 numbers our market would be jumping. Unfortunately the FHA decision makes little practical sense, and has virtually no chance of being changed this year.

My name is Dale E. Bledsoe with Crown Key Realty and as always I may be reached at 209-481-6031.

 

Marney Kirk
Cummings & Co. Realtors - Towson, MD
Towson, Maryland Real Estate

Hi Dale,

The reduction in FHA loan amounts has affected us here in Baltimore, too. I am not sure it is as significant as your area, but I feel it is a factor in the slowing market here as well.

Jul 21, 2014 09:35 AM
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

I have not noticed any difference in my clients, but I just chuckle when I see the NO down loans...have we learned nothing.

Jul 21, 2014 09:57 AM
Karl Hess
Keller Williams Shore Properties - Barnegat, NJ
on The Jersey Shore

"Approximately 650 counties will have lower limits as a result of this change in the governing law. The higher limits that have been in place for six years were established by the Economic Stimulus Act of 2008 as emergency measures to assure that mortgage credit was widely available during a time when private lending options were severely constrained. The lower loan limits under HERA were originally scheduled to take effect in January of 2009, however, due to continuing strains in credit markets, Congress delayed implementation several times."

Jul 21, 2014 11:46 PM
Doug Rogers
RE/MAX Coastal Properties - Destin, FL
Your Real Estate Resource!

In my market 150k will get someone a "nice" 3 bedroom home. Hence, we never approach the FHA limit. Clients who go that high often jump into a conventional loan product.

Jul 21, 2014 11:59 PM
Than Maynard
Coldwell Banker Heart of Oklahoma - Purcell, OK
Broker - Licensed to List & Sell - 405-990-8862

FHA isn't designed for everyone. It was orginally for lower income and has simply been expanded to cover everyone (almost).

Jul 22, 2014 05:10 AM
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Dale

The FHA Change has not been a positive change for home sellers and buyers . . . . may they will see the error in their ways . . . .  or maybe not.

Good luck and success.

Lou Ludwig

Jul 22, 2014 09:54 AM