On Monday, The Washington Post published an article about how loan limits are going to affect high end home prices in the DC area. To summarize, "this fall, the government is scheduled to stop backing loans of more than $625,500, making them subject to higher interest rates and down payments. The change could drag down home prices, especially in upscale neighborhoods, and deliver yet another blow to the faltering housing market."
It was also hot topic at our weekly meeting. There was a lot of speculation if the limits will be extended or not. Also discussed was how it would impact our business and real estate in general. Meanwhile, the limits are set to expire on September 30th, 2011. This does not bode well for our region, which has shown recent price growth of 4.3% in March 2011 vs. March 2010.
Why are realtors up in arms about this change? DC is expensive. Lowering the loan limits is going to make it more difficult (and it's already difficult, thank you very little shady lenders from 2001-2007) for buyers to buy and sellers to sell. Already, sellers who were waiting to sell in the Fall are reconsidering that strategy. Ditto with buyers.
As someone from North Carolina recently commented on my Facebook page, "A 2 bedroom for only 997K? It's a steal!" Yes..I understand your sarcasm but that's the DC market. That condo happened to be in a luxury building in the middle of Foggy Bottom, it was 1400 square feet and had garage parking. You pay top dollar for the convenience of city living especially if it's luxury living.
Welcome to the DC market. It's unique, expensive and vibrant. It certainly isn't the same as markets in other parts of the country. Below is graphic about prices dropping through out the country…except in DC.
