REVISED CONFORMING LOAN LIMITS FALL SHORT

Revised Fannie, Freddie loan limits will benefit homebuyers,but don't go far enough to improve homeownership opportunities in California
LOS ANGELES (Nov. 29) – More than 28,590 families in California will be able to benefit from Fannie Mae's and Freddie Mac's announcements today that each will increase its single-family mortgage loan limit from $359,650 to $417,000 in 2006, according to an analysis by the California Association of REALTORS® (C.A.R.).
"While this is good news for many homebuyers, Fannie Mae’s and Freddie Mac's new loan limits do not go far enough to benefit most homebuyers in California," said C.A.R. President Vince Malta. "Conforming loan limits need to more accurately reflect the cost of housing in California, where the median price of a home is more than double that of the nation."
The current median home price in California is $538,770, an increase of 17.2 percent compared to a year ago and more than 29 percent higher than the national conforming loan limit of $417,000. In addition, California has 19 counties with a median-home price above the national conforming loan limit.
Based on its 2006 sales projection, C.A.R. expects that 304,700 sales in the state will fall into the price range implied by the higher loan limits, an increase of 72,070 homes over the 2005 loan limits. The $57,350 increase in the single-family mortgage loan limit translates into an additional 28,590 households able to take advantage of savings provided by having a Fannie Mae or Freddie Mac qualifying mortgage.
(reprinted from CAR newsline 11/30/05)