Rates Are Down, Limits Are Up!

Loan limits just went up a ton on a regular conventional mortgage and interest rates are finally down a little bit. 

Hey guys what's up my name is Christian Morrison, I am a local real estate agent here in the Rapid City/Black Hills area. This is Rapid City Real Estate News where we go over what's happening in Rapid City real estate wise. We go over a little bit of what's happening in the nation that affects us locally too. So, let's get straight into it. Couple things that have happened in the last couple of days. 1) They raised the loan limit, by they I mean the federal government, raised the loan limits to quite a bit higher than what they were before. If you aren't familiar with how this typically works conventional loans have a limit to how much money you can borrow on them and after you go over that limit, you go to what is called a jumbo loan for anything more expensive than that. So in the past, when I first started in real estate it was like $410,000-$415,000 was the highest amount you could get a loan for, that wasn’t considered a jumbo loan. Now, they just raised it, and this will start in 2023, to $726,200, so a really big increase, before I believe it was $680,000 so a big increase from the previous number, and so basically what this means is, you can use that to buy more expensive homes, and not have to go to a jumbo loan, which usually is a higher interest rate or more down payment, things like that. One thing I think people get confused by on the limit is $726,000 is the amount of loan you can get, but if you are putting money down, that is not included in that. So let's say you’re buying a million dollar house, and as long as you are putting at least $275,000ish down then you are going to be able to get that regular loan and not have to go to a jumbo loan and so on and so forth. 

So that's a cool thing that is happening and it makes it easier for people who are buying in that upper price point to be able to get a loan or not do a jumbo loan. Now basically their reasoning for doing this is because housing prices have gotten more expensive around the country and want people to be able to buy a house you know that a normal house in the area or an upper income house and not to go to that jumbo loan. 

Now another cool thing that has happened is interest rates have gone down a little bit, and by a little bit I mean like by almost three quarters of a percent, right now interest rates are at 6.81% and that pretty amazing, that they have gone down that much. And I was supposed to have a lender on, I talked about it last week, to talk about a program they have in-house here for a 10-year buy down, he’s actually going to be on next Tuesday and today is Wednesday if you are watching this, and there was a delay because running a business and there are things that come up, but next Tuesday, he is going to be on and we are going to record it and he’ll talk about that product, so that's really cool as well. So I didn’t forget and he will be on next week. 

So yeah, interest rates being down is obviously a good thing. If you look at Fannie Mae's predictions for what is going to happen these next couple years, they believe it will hover around 6 to 6.5% until the end of 2024, as they’re looking at their economic predictions for next year. They believe, in their wording, that we will enter and exit a mild recession. I was talking to someone about this today their biggest commercial real estate guy in the Rapid City area, and the Black Hills probably as a whole, but we were talking about how people, you know, have switched from 2020-2021 thinking “Oh I am going to sell this for max dollar, the market is going crazy.” and for two years of that craziness of things selling over asking price and asking for crazy numbers, people got programmed thinking that’s how the market was. And now that the market has changed, there’s like two segments of people. People that think its over, the real estate market is going to crash completely and they’re panicking and they are like “We missed the boat, it’s over, we either keep our house or we are never going to be able to sell it for enough” and the people that are like on my side of it that I just think we’re just returning to the normal real estate market, it’s nothing that crazy, we needed the market to slow down, if it was going to continue on that path, no one would be able to afford a house, except for the elite of the elite income wise, so him and I were talking, and we agreed on this, that the market is just returning to a normal market, and that's a good thing, and it's not a bad thing, and interest rates are probably going to be what they are going to be for a while, and there are going to be people  combating it with programs in-house and things like that and ways to get around it, but basically guys, it's just returning to a normal market. If you compare it to any year except the last two years we’re getting pretty normal here. Now in 2019 I remember the average days on the market was about 45 days, before a house sold, and now we are getting closer to that number right now it's 31 days as the average until it sells. One of the numbers that really shows you is when you look and see how many houses hit the market, and if any of those went under contract and last week was the first we had 0 in the last couple years. So out of the 15 houses that went on the market none went under contract, 8 houses closed, and we are in a slower period of the year, which is the winter. Some of these numbers are going to be a bit lower, 198 houses on the market. So yeah, everything is starting to creep back up to what it was before all the craziness of the last two years. 

One thing that I did want to point out before we wrap up here is the number of new construction houses on the market, there is about 60 new construction houses currently active on the market, if you have contemplated getting a new construction I would look into it you know, before the spring hits, because I think you could get a really good deal on some of those and you already can get a good deal on a lot of those that I have been working with, so if you are interested in new construction definitely look at that, a lot of good opportunities, builders are wanting to get rid of them, some of them want to get rid of them some of them don’t care, but might be a good time to snag up a good deal before the market picks back up in the spring.

As always guys, if you have any questions, you want to go further in depth on your personal situation in real estate or you are looking at moving here, whatever is going on, you can hit the link below and schedule a call with me, pop a 15 minute time slot on my calendar and we talk about whatever you need to talk about. Thanks for watching this week guys, see you next week! Peace!