Critical Date for Home Sellers on the Horizon

Culver City home sellers—and perhaps more important, potential home sellers—should know why Oct. 1 is a critical date for them. 

At the beginning of the financial crisis, the home loan rate limits for conforming loans were increased to $729,750 from $625,500. This was done on a temporary basis to help the housing market attract buyers with lower rates and better terms. It made it easier for buyers to obtain attractive financing.

A conforming loan rate is a significant boon to potential home buyers in California, and in particular, Culver City. Given that the average home price in CC is around the $680,000 range, you can see that a lot of buyers could take advantage of the lower rates. In addition, the non-conforming home loan comes with higher fees and stricter requirements in terms of loan qualification. As an aside, this is one of the reasons that homes in Culver City priced at more than $1 million struggled to find buyers during the last couple of years.

So, unless the government steps in to extend this arrangement, the conforming loan limits will automatically revert back to their pre-crisis levels of $625,500. As this move will undoubtedly affect borrowers' ability to obtain affordable mortgages, this could in turn put further downward pressure on prices.

If will also mean that fewer people will be able to qualify for a loan, and therefore create a weaker environment for sellers to work in. All Culver City homeowners have a vested interest in a strong and stable real estate market. It's time to write your elected officials and put as much pressure on them to continue these higher conforming loan limits, at least until the real estate market as a whole is on a more solid foundation.