Congress JUST Reset The Housing Market
Let’s discuss the housing market, new Fannie Mae / Freddie Mac loan limits for 2023, and what this means for home prices - Enjoy! Add me on Instagram: GPStephan | MY NEWSLETTER: http://grahamstephan.com/newsletter
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2023 HOME PRICES:
Fannie Mae and Freddie Mac are a “Federally Backed Mortgage Company,” who buys and guarantees loans made by lenders and banks.
However, throughout the last year - both inflation and home prices have increased - and, as a result, Fannie Mae and Freddie Mac’s Loan Limits go up, to the tune of 12%, which - equates to an extra $79,000 that buyers can borrow.
As The WallStreetJournal says, “The higher limit means borrowers can qualify for bigger loans without needing to take out jumbo mortgages, which aren’t federally backed and have more-stringent requirements for income, credit and down payments”…
And, the chief economist of Redfin says that “the new cap opens up a whole new set of homes for buyers to consider that may have previously exceeded their budget for a monthly mortgage payment” - so, for $30,000 - THEORETICALLY, you could be the proud new owner of a million dollar home.
In terms of whether or not this is a repeat of 2008: No. Even though prices have seen a SIMILAR run-up throughout the last 2 years…most of that was caused by historically low interest rates, and buyers are still VERY qualified in terms of what they’re allowed to purchase.
For example, today, buyers are required to have a certain amount saved for a down payment, maintain a strict debt-to-income ratio, verify employment, and go through a rigorous credit check.
That is A STARK difference from the days of no money down, stated-income financing…and, sure - loan limits increasing might put SOME additional upward pressure on housing prices…but, nowhere near the extent of what we saw more than a decade ago.
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