Summary: There is a chance we could see higher mortgage loan limits in King County, Washington in 2018, due to significant home price increases that have occurred over the last year.
It would be an understatement to say that house values in Washington State have risen over the last year. In fact, we have seen double-digit gains in many cities across the state. As a result of this trend, federal housing officials might increase the mortgage loan limits for King County, Washington in 2018. It happened last year, and we could see a repeat for 2018.
A Look at Current King County Mortgage Loan Limits
What is a loan limit, exactly? In this context, we are talking about the maximum mortgage amount for different types of home loan programs. There are size limits for FHA, conventional and VA mortgages. These limits vary by county because they are based on median home prices, which also very by location.
Just to be clear, it’s possible to borrow more than the limits mentioned below. This is what’s known as a jumbo mortgage loan, a topic we have covered several times in the past.
During 2017, the loan limit for a single-family home in King County is $592,250. This applies to conventional, FHA and VA loans alike. These three financing options don’t always have the same limit. In previous years, we have seen different maximum mortgage amounts for FHA and conventional loans. But for 2017, all three loan types are aligned in terms of their limits.
And they could rise again going into 2018, due to significant home-price gains.
Significant Home-Price Increases Over the Last Year
Washington has seen some of the biggest home-price increases of any state in the country, during the last couple of years.
According to the Northwest Multiple Listing Service, home prices in King County rose by more than $100,000 in July 2017 compared to the same month a year earlier. The median home price for the County hit $658,000 in July, which was an increase of 18.6% from a year earlier.
While the percentages vary, we have seen similar trends across the state of Washington – and the Pacific Northwest as a whole – over the last couple of years.
Home prices appear to be cooling down a bit, especially in some of the state’s most heated real estate markets like Seattle. Still, house values statewide are expected to continue rising (to some degree) through the end of 2017 and into 2018.
The economists at Zillow, for example, predicted that home prices in King County would rise by another 6% over the next 12 months ending into September 2018.
As a result of these trends, mortgage loan limits for King County, Washington could go up in 2018. We will know for sure toward the end of November, or early December. That’s typically when the HUD and the Federal Housing Finance Agency announce revised loan limits for the next calendar year.
Housing Costs Expected to Rise During 2018
On September 21, Freddie Mac published its latest long-range forecast for the U.S. economy and housing market. By their estimation, 30-year mortgage rates will average 4.4% during 2018. That would be a jump from where we are right now. When this article was published, during the third week of September 2017, the average rate for a 30-year fixed home loan was 3.83%.
The Mortgage Bankers Association also expects to see a gradual increase in home loan rates over the coming months. According to their latest forecast, 30-year rates could climb to 4.2% by the end of 2017, and continue to rise gradually through next year as well.
Home prices in King County will most likely continue rising as well. That’s because housing supply is still falling short of demand. There are plenty of buyers entering the real estate market, but not enough homes to go around. Increased home construction could strike a better balance in the future, but that probably won’t happen for a while. This imbalance will continue to put upward pressure on home prices in King County, and could lead to higher loan limits in 2018.