Thanks to a little boost from mortgage lenders this month, 2018 could be the year all those Street Scout and Zillow couch surfers finally pull the trigger on their dream home.
Rising metro Phoenix home prices are making it harder for many buyers. But this month, government mortgage backers began offering a little extra help.
The Federal Housing Administration, Fannie Mae and Freddie Mac have raised the loan limits for mortgages.
Almost 64 percent of all Phoenix-area homebuyers used one of those loans to buy in 2017, so the higher limits are bound to give the market a boost.
Homebuyers can now borrow up to $453,100 using Fannie and Freddie mortgages. That's up $29,000 from last year.
Almost half of Valley homebuyers took out a loan backed by one of those two federally-owned mortgage giants last year, according to The Information Market, owned by the Arizona Regional Multiple Listing Service.
The loan limits on Federal Housing Administration loans climbed to $294,515 from $279,450 at the beginning of the year. More than 15 percent of Phoenix-area homebuyers took out Federal Housing Administration loans in 2017.
Most mortgage brokers and real estate agents are cheering the loan increases. Limits on federally-backed mortgages went up in most parts of the U.S.
“The loan limit increase is a small but necessary drop in the bucket of necessary moves that will continue to help the Phoenix housing market grow,” said Amy Swaney, branch manager of Citywide Home Loans in Scottsdale.
And she said the changes will not only help first-time buyers but also move-up buyers.
The Valley’s median home price is about $250,000, up about 6 percent from last year. Move-up homes in the area are typically priced at about $500,000.
So with the new Fannie and Freddie loan limits, a buyer could now purchase an almost half-million dollar home with a 10 percent down payment.
Government-backed mortgages are popular with lenders because they carry less risk and usually mean lower interest rates for borrowers.
And it sounds like the boost is paying off already.
“I’ve been surprised by how many new loans we have seen since the limits were increased this month,” said Dean Wegner of the Scottsdale office of HomeStreet Bank. "I think the higher limits helped with some pent-up demand from buyers."
Since the too-easy-to-get subprime mortgages that spurred the housing crash, any changes to make getting a mortgage easier raises alarm bells with some real estate market watchers — including me.
I'm watching closely for any signs that could spark another housing crash.
But this is only the second time since the crash in 2008 that federal loan limits have been increased. The first was in 2016.
And metro Phoenix home prices have nearly doubled since the crash.
Many of us bought our first homes with a Federal Housing Administration loan, which we couldn’t have done if the limits were too low. We'll see if the same proves true for the next generation of new home buyers and maybe even more Lindsays and Dylans will sign the dotted line on their first house.