New loan limits would cost state 674 sales a year – NAR

Ken Fears, manager of regional economics for the National Association of Realtors, recently completed a study on the impact of lowering the nation’s lending ceilings, titled “Small Market Share, Big Economic Impact.”

The Federal Housing Administration will install new ceilings on mortgages it will insure in high cost areas beginning October 1. Fannie Mae and Freddie Mac will do the same. For example, the conforming loan limit will fall to $506,000 from $567,500 in King, Pierce and Snohomish counties. Kitsap County takes a hit from $475,000 to $417,000.

Fears estimated that the move would mean 674 “lost” sales in Washington state, amounting to a loss of $5,765,889 in annual transfer fees (county excise taxes). Fears computes the economic impact of 674 sales to be $78,861,247.

“The housing market is in recovery mode and while a healthy market implies an expanded private presence in the mortgage market, the costs of what appears to be a small shift could have large impacts for local economies,” Fears wrote.