New Loan Limits & 2024 Housing Outlook

Federal Reserve Chairman Jerome Powell said Friday that it was too early to declare victory over inflation, watering down market expectations for interest rate cuts next year. “It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease,” Powell said in prepared remarks.

But that’s not stopping some analysts and money managers from saying the Fed needs to cut rates starting as soon as March 2024 and possibly have to cut rates 5 times throughout the year.  The base case is that they need to do this is in order to avoid an extreme and protracted monetary tightening cycle. The markets are largely concluding that the fed is done with its tightening cycle, but they will have to give up on the goal of getting back to 2% inflation. So already, 2024 is making ripple effects and we’re not even there yet!

It’s looking like we’ll end 2023 with higher housing inventory than this time last year. Home prices will also be up and we have more homes under contract than we did at the end of 2022. All told, these signs position 2024 for a turnaround from one of the slowest home-sale years in decades.

Price reductions are receding now for the new-year cycle, with 38.7% of the homes on the housing market taking a price cut in the last week. That’s a lot, but it’s less than the same week a year ago, and it’s not deteriorating. Basically, the extremely low volume of sales isn’t causing overall home prices to even take a dent.

And Home prices held up surprisingly well in 2023 despite very few transactions. The median price of single-family homes in the United States was $425,000 for the week, which is unchanged from the week prior and 2% higher than the same period in 2022. That’s right, higher…again. So no collapsing home prices on the horizon…sorry internet trolls.

So in the end, we’re going into 2024 with slight home-price gains, somewhat easing inventory constraints, slightly increasing transaction volume and elevated but decreasing price cuts.

Did you hear about the new conforming loan limits for 2024? Recently Fannie Mae and Freddie Mac released their revised loan limits for 2024. This increase reflects a 5.5% uptick in conforming low limits that will allow homebuyers and refinancers to acquire a lower mortgage rate compared to jumbo or high balance offering of this same loan balance.

Nationwide the new conforming loan limits are as follows:

• The 1 unit loan limit is $766,550
• The 2 unit loan limit is $981,500
• The 3 unit loan limit is $1,186,350
• The 4 unit loan limit is $1,474,400

For areas considered “high cost” across the country the loan limits are even higher. For example, in San Diego County:

• The 1 unit loan limit is $1,006,250
• The 2 unit loan limit is $1,288,200
• The 3 unit loan limit is $1,557,150
• The 4 unit loan limit is $1,935,150

If elevated rates and lower conforming loan limits were the reason you were sidelined in 2023 take heart, because it looks like 2024 could be the year that affordability opens up for you once again

Any of you watching this that are looking to buy a house in 2024, send us a DM or drop a comment so we can help you get qualified.

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