I’m asked all the time what types of homes are selling. Lately, my answer has been “lower priced homes”. More specifically, homes under the conforming loan limit for Boulder County. Up until very recently Boulder County’s upper limit for conforming loans has been $417,000. Recently it was increased to $460,000.
Loans above the conforming limit are called “jumbo loans”. Conforming loans can be sold on the secondary market facilitated by Fannie Mae and Freddie Mac, jumbo loans can’t. In the past there was not that much of a difference between a conforming loans in terms of rate. It was higher but in the same ballpark. Now, since the credit crunch, jumbo loans are much more expensive. This premium in rate is slowing sales in the price ranges where buyers do not qualify for a conforming loan without a huge down payment.
Here is why this increase will make a difference. The increase in the loan limit will help sell a few more homes in the $500,000 to $600,000 range. It makes those homes more affordable to many more buyers who without a larger down payment could not make the numbers work. It won’t make a big impact for us but everything helps.