Congressional Vote Impacts Santa Cruz Real Estate

Congress reinstated FHA loan limits to $729,750 in a 70-30 vote.  This means that if someone can purchase a property with a 3½% down payment with up to a loan of $729,750. This type of loan has traditionally helped first time home buyers but also helps anyone without 20% down payment.  The borrower does pay mortgage insurance because of the lower down payment.
However, Congress chose not to reinstate higher loan limits for government guaranteed mortgages.  This loan limit fell to $625,500 in Santa Cruz County and even lower in Monterey County.  With the lending industry not fully recovered almost all mortgages being made are of the government insured variety.  So these lower limits strip buyers of purchasing power at the middle and upper price ranges and have caused prices to soften in those ranges over the last few months here in Santa Cruz County.