SAN JUAN CAPISTRANO, California (MO.Properties) – Veterans trying to buy homes using their VA loan received a small boost last week from FHFA, but it wasn’t near enough. In late November each year, the Federal Housing Finance Agency (FHFA) sets the new conforming loan limit for the coming year. The loan limit was raised 7.4% from $510,400 to $548,250, but extreme pressures in the real estate market have developed as a result of low housing inventory, pent up demand and record low rates resulting from the coronavirus. All this has active military and Veteran home buyers reeling for help in the most competitive housing market in recent history.
“Unfortunately, most VA buyers are getting crushed in this market,” said Peter Van Brady, author & founder of SoCal VA Homes, a company that works exclusively with Veteran home buyers. “In a market where prices are getting bid through the roof and appraisals are coming in low, now more VA buyers than ever need financing above conforming loan limits with VA jumbo loans. And for years Veterans have been depending on lenders for cash credits to cover closing fees. Thanks to COVID, lender credits (if any) are only available through conforming loan amounts, not jumbos. With higher prices and jumbo loans, now they’ll need money for closing costs and they’ll have to consider contributing to down payments to cover the low appraisals. This a bit of a tragedy and will keep some VA buyers from successfully purchasing,” said Brady.
With COVID helping to drive 30-year fixed rates to rock bottom levels never seen before, the housing market has responded, releasing explosive demand and intense competition for homes. As an example of this price squeeze, here’s how fast prices are rising. According to data from the California Association of Realtors, in the Los Angeles, CA the pre COVID median home price in July 2019 was $550,000. The price stayed in that range for nearly a year. Yet from June 2020 to October 2020 that median price rose from $553,000 to $632,710. That’s whopping increase of 14.41% in four months!
With the median price in Los Angeles of $632,710 and the conforming loan limit for 2021 at $548,250, VA buyers can see that there are challenges that lie ahead, especially in these high-cost markets. There is hope though…some VA buyers are achieving success through preparation, persistence and a tactical approach to making VA offers to purchase. For Veterans wanting to understand how these new loan limits affects your specific situation, much more information can be found at VA loan limits 2021 Or you can call a Client Service Specialist at SoCal VA Homes at 949-268-7742.