"$850 w/ 3.5 down, omg?!" 2021 California loan limits announced

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Every year around Thanksgiving, the Real Estate Gods announce the new conforming loan limits for the year to follow. Whoop whoop!

Source: https://www.fhfa.gov/Media/Pub...

The following chart assumes that DTI, FICO scores, closing costs, etc, are not a limiting factor. It assumes that the only limiting factors are those loan limits. It's not a commitment to lend or any of that, it's just for real estate and mortgage professionals in California to reference while helping their clients, not intended for consumers to read or reference. If you aren't a mortgage or real estate professional, please stop reading this post!

Single family homes, townhomes, and condos, are in gray. 2-4 unit properties are on the right.

Here you are... print this, and tack it up somewhere in your office, put it in your wallet, your purse, what have you:

In the high balance range for high cost of living counties, It's accurate for major Bay Area counties like Alameda (thus, Oakland), San Francisco, Contra Costa, Santa Clara (thus, San Jose), and so on, as well as Orange and LA Counties in SoCal. It's not accurate for Solano County, San Diego, Sacramento, Sonoma, Napa, and a few others. 

Also note that for your clients that want to put 3.5% down on a $1.6m fourplex that's 2 blocks away from Apple or Google headquarters.... if it was as easy as that, we'd all already have done it, myself included. Those folks are mostly delusional, move on to people more grounded in reality. :)

Originally posted by @Emily Beatty :

Great news for Bay Area home owners and investors alike to get a little more bang for their buck before moving to a jumbo loan. 

Does it also mean that there will be more buyers, more overbidding and the market price will increase?


Originally posted by @Steve Morris :

Anything to keep the Bay Area housing bubble going isn't it?  I guess I should be happy it's 3.5% down instead of 3%.

Portland market moved up to the 548k  also..  keeps a tiny bubbles going !


Originally posted by @Hung Dao :
Originally posted by @Emily Beatty:

Great news for Bay Area home owners and investors alike to get a little more bang for their buck before moving to a jumbo loan. 

Does it also mean that there will be more buyers, more overbidding and the market price will increase?


Throughout 2020, we saw home values get bid up to numbers right around the max price with X% down (the 2020 versions of the numbers on the above chart), with many cases of cash-heavy buyers going above/beyond that just to dump USD into real estate where it's hedged against inflation. Average down payment sizes for SFR owner occupants have gotten much larger, I'm not even blinking any more when someone calls me that's ready/eager/willing/able to plunk down $350k just to get that stack of cash parked somewhere that it's protected from both inflation and stock market declines. All the depository accounts with six figures in them gathering cobwebs are coming out of the woodwork; I have no idea how much longer that "six figure depository account gathering cobwebs" runway can/will stretch.

I don't see any indication of a "winter slowdown" this year, and it's about to be December. The more homes listed and the more offers put in, each and every time that's an opportunity for values to get bid up. Normally that chills out a bit over the winter, even in California where there isn't snow. This year, looking at "leading indicators" like preapproval request volume (that's a data point doesn't make it into any databases that journalists and academics see since lenders and loan officers don't have to report it anywhere), I'm not seeing anything telling me that seasonal dropoff is going to be a thing this year. Most Mondays I do not get a whole lot done but catch-up; if I'm down to minimal unread emails by the end of the day Monday then I'm calling it a win.

There was an online exchange between some armchair economists that I found interesting.

Persons a through d: omg my house value is up and the stock market hit 30k the world is amazing if you're not poor

Person e: it's just inflation idiots, it's not appreciation, nothing has actually gone up in value, the individual dollar is just less valuable. https://fred.stlouisfed.org/se...

Person f: Unless the inflationary period is followed by deflation, inflation and appreciation are one and the same.

Mostly I was aligned with person E until I read F's comments. I haven't really been hearing a lot of speculation or commentary or arguments that we've got deflation in store. Most people seem just concerned about inflation. I do not claim to be an economist, but it's not obvious to me how it might come to pass that the individual dollar will become more valuable than it was in Feb 2020. They've printed some $5t of those individual dollars, and the size of our economy is only like $25k, that looks like something becoming less scarce to me, not more scarce.