The “force” is growing stronger with FHA lately in Sacramento. Yes, that was a Star Wars reference. The latest stats over the past couple of months show an uptick in FHA loans by 2% when considering the entire county and 4% when looking at sales under $200,000. As you can see, less cash and more inventory are creating an environment for FHA to take a stronger grip on the market. Any thoughts or predictions for upcoming market changes? If you are an agent, do you find your sellers more open to FHA these days?
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Bill Cobb says
Wow Ryan, your market update is shocking to me! Effective July 1, 2013, FHA mandated that new FHA Loans come with permenenant “MI” or Mortgage Insurance for the life of the loan no matter how much equity one has in their home. Not certain why anyone would sign up for that? In Baton Rouge Housing May through August 2013, FHA accounted for 13%, 19%, 15% and 15% of home financing, not consistent with the trend in your market. And, we do have FMHA RD or Rural Development financing, even used in the City, which is very similar to FHA without permanent MI.
Ryan Lundquist says
Thanks Bill. The rule went into effect in early July, which means some of these escrows were already in contract before that date. I would say the numbers probably don’t fully express if there is a market response yet. We’ll see. FHA though is the only way many first-time buyers can play the housing game locally, so it is still a better option than nothing. Moreover, FHA buyers have been beat out by investors over the past 12 months or so, which makes it refreshing to just start to be able to get back into contract again. We’ll see in coming months if the trend continues or not. USDA financing is only applicable to certain communities in the Sacramento area from what I understand (correct me if I’m wrong LOs), so FHA would still be the only realistic option for many buyers (besides saving up 10-20% for a down payment of course).