On January 1, the FHA is reducing the size of loan that it will insure for its 3.5% down mortgage program in "high cost" areas like ours (FHA to Drop Upper Mortgage Limits Jan. 1). The new limit will be the previous limit of $625,500, which had been temporarily boosted to $729,750 in an effort to stimulate home buying.
Translation: With 3.5% down, a homebuyer will be able to purchase a home valued at up to $648,186 instead of $756,217. Right now in the Beach Cities + El Segundo + Torrance, that reduces the number of affordable single family homes and townhomes homes on the market from 96 to 60. Excluding Torrance, it reduces the number of affordable homes on the market from 35 to just 14!!!
-David
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