Summary: Where with Seattle’s conforming loan limit be in 2020? This article will look deeper into the trends that could dictate how things pan out next year.
Conventional loan limits for the Seattle metro area might go up in 2020, as they have been doing over the past few years with increasing housing prices. But with home prices actually declining in Seattle over the past 12 months, where will conforming loan limits in Seattle be?
Currently, the conforming loan limit for Seattle (and all of King County) is $726,525. But federal housing officials might increase it in 2020. We’ll just have to wait and see if will increase, and if so, by how much.
Will Seattle See Higher Loan Limits in 2020?
Home prices across the Seattle metro area have increased steadily over the past few years, though they stagnated and even dipped over the last 12 months. That said, the conforming loan limit has steadily increased over the recent past.
According to the latest data for September 2019, the median home value for King County is now north of $612,400. And it’s even higher within Seattle.
High house prices in and around Seattle could lead to an increase in the conforming loan limits for the area.
Loan limits are established by federal housing agencies and are largely based on the median home values within each county. And when those house prices rise considerably over the course of a year, housing officials often increase the loan limits to keep up.
That’s something we’ve seen in Seattle over the last year, but since July of 2018, the prices in Seattle have actually dropped. So, what does that mean for conforming loan limits in Seattle in 2020?
Consider the following:
The median home value for King County, Washington was $612,400 in September 2019, according to Zillow. The median price within the city of Seattle was $713,100. The 2019 conforming loan limit for the county and metro area is $726,525; that’s lower than the King County median home value but higher than the Seattlemedian home value. It’s an interesting situation, as the conforming loan limit has typically been lower than housing prices, especially in Seattle.
In Napa County, California (by way of comparison), the median home value was $673,700 as of September 2019. That’s lower than Seattle. But the conforming loan limit in Napa County is currently set much higher at $726,525.
Declining Home Values Might Justify Leaving Loan Limits as is
In King County — and within the Seattle metro area in particular — there was a big “gap” between home values and loan limits. Those limits were set well below average and median house prices for this part of the state. Real estate values in the Seattle area seem to have warranted high conforming loan limits for 2019.
But because home prices in Seattle have declined over the past 12 months, it may not make much sense to increase loan limits in 2020, unless there is an expectation that home prices will rise once again. It remains to be seen what the federal housing officials will do with conforming loan limits in Seattle in 2020.
Going ‘Jumbo’ With Your Mortgage Financing
As mentioned earlier, it’s possible to borrow more than the conforming loan limit for a particular county. This is referred to as a jumbo mortgage.
As of 2019, a conventional home loan in the Seattle area that exceeds the $726,525 limit is considered to be a jumbo loan. And with house values as high as they are right now, there are likely more borrowers seeking this level of financing today.
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