Federal Housing Agency Increases Loan Limits In High-Cost Areas to More Than $1 Million

WASHINGTON—The Federal Housing Finance Agency announced on Nov. 29 increases to the conforming loan limit values for mortgages to be acquired by Fannie Mae and Freddie Mac in 2023. In most of the United States, the 2023 CLL value for one-unit properties will be $726,200, an increase of $79,000 from $647,200 in 2022.

For high-cost areas in which 115% of the local median home value exceeds the baseline conforming loan limit, the applicable loan limit will be higher than the baseline loan limit. HERA establishes the high-cost area limit in those areas as a multiple of the area median home value, while setting the ceiling at 150% of the baseline limit. Median home values generally increased in high-cost areas in 2022, which increased their CLL. The new ceiling loan limit for one-unit properties will be $1,089,300, which is 150% of $726,200.

Most of the market area of the Hudson Gateway Association of Realtors is considered high-cost. The following are the new conforming loan limit values in the region:

Bronx, Manhattan, Putnam, Rockland, Westchester: $1,089,300, One Unit Limit; $1,394,775, Two-Unit Limit; $1,685,850, Three-Unit Limit; $2,095,200, Four Unit Limit.

Orange: $726,525, One Unit Limit; $930,300, Two-Unit Limit; $1,124475, Three-Unit Limit; $1,397,400, Four Unit Limit.

Sullivan: $726,200, One Unit Limit; $929,850, Two-Unit Limit; $1,123,900, Three-Unit Limit; $1,396,800 Four Unit Limit.

Special statutory provisions establish different loan limits for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $1,089,300 for one-unit properties.

Due to rising home values, the CLLs will be higher in all but two U.S. counties or county equivalents.

The Housing and Economic Recovery Act requires that the baseline CLL for the Enterprises be adjusted each year to reflect the change in the average U.S. home price. On Nov. 29, FHFA published its third quarter 2022 FHFA House Price Index report, which includes statistics for the increase in the average U.S. home value over the last four quarters. According to the nominal, seasonally adjusted, expanded-data FHFA HPI, house prices increased 12.21%, on average, between the third quarters of 2021 and 2022. Therefore, the baseline CLL in 2023 will increase by the same percentage.

The FHFA also reported that nationally, the U.S. housing market experienced positive annual appreciation each quarter since the start of 2012.

Other key takeaways from the FHFA report included:

• House prices rose in all 50 states and the District of Columbia between the third quarters of 2021 and 2022. The five areas with the highest annual appreciation were: 1) Florida 22.7%; 2) South Carolina 18.4%; 3) Tennessee 17.9%; 4) North Carolina 17.4%; and 5) Georgia 16.7%. The areas showing the lowest annual appreciation were: 1) District of Columbia 1.8%; 2) Oregon 7.6%; 3) California 7.6%; 4) Minnesota 7.7% and 5) Louisiana 8.3%.

• House prices rose in all but two of the top 100 largest metropolitan areas over the last four quarters. Annual price increases were greatest in North Port-Sarasota-Bradenton, FL, where price increased by 29.2%. Two metropolitan areas that experienced price declines were San Francisco-San Mateo-Redwood City, CA and Oakland-Berkeley-Livermore, CA, where prices decreased by 4.3% and 0.6%, respectively.

• Of the nine census divisions, the South Atlantic division recorded the strongest four-quarter appreciation, posting a 17.0% gain between the third quarters of 2021 and 2022. Annual house price appreciation was weakest in the Pacific division, where prices rose by 8.3% between the third quarters of 2021 and 2022.