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It is exciting to see that we are heading into 2025 with more inventory than we’ve started any year with since the end 2019.
Speculation can make the housing market seem like one big guessing game! Will rates go up or down? Will values go up or down? Will people want to buy in Northern Arizona or not? Will rules and regulations change? The list could go on, but while those speculations can have a place, today is about firm ground and what you can “take to the bank” when it comes to the 2025 Housing Market.
It is exciting to see that we are heading into 2025 with more inventory than we’ve started any year with since the end 2019.
New Year, New Loan Limits
Loan limits are important to the general consumer as conforming loans as well as other government backed loans like FHA usually have the broadest, most accommodating guidelines and competitive terms when it comes to home finance products. Expansion of program loan limits generally is positive, meaning that more folks have access to universal programs to pursue their home purchase versus having to pursue niche and potentially more costly products.
When I first began in the business in 2009, the maximum conforming loan limit on a single unit for Fannie Mae and Freddie Mac backed loans was $417,000. It is a bit fascinating to note that conforming loan limits started in 1980 at $93,750 and grew as Fannie and Freddie worked to keep up with change in markets and inflation. From 2006 to 2016, that $417,000 was the prevailing loan limit as we saw the crash and recovery of the great housing bubble.
Since 2016, we’ve seen steady increases to that limit with 2024’s limit at $766,550 for a single unit. As you’ll see in the chart, the conforming loan limit for 2025 has reached $806,500, which marks a significant threshold. Yes, you can do as little as 3% down with conforming loans and a national average of down payment closer to around 10%, but with a 20% down payment, 2025’s loan limits put you in the seven-figure house-buying budget.
The chart to the right also reflects FHA loan limits, which do fluctuate much more based on county, with Coconino carrying a higher limit than most of the state. The FHA loan allows as low as a 3.5% down and is especially well suited for folks who need more accommodating guidelines on either FICO scores, debt to income, etc., so being able to work just under the area median sales price with FHA’s new price point will be a great resource for many home buyers heading into next year. While many home buyers may feel the deck is a bit stacked against them, this is one major positive you have working in your corner for 2025!
More Options Than We’ve Seen in Years
The lack of inventory in Northern Arizona is one of the main reasons for much of the stress and struggle of the recent home buyer. Lack of choice, more people competing for fewer listings, and price increases are just some of those examples. It is exciting to see that we are heading into 2025 with more inventory than we’ve started any year with since the end 2019. This represents just under a 14% increase from last year and while it isn’t anywhere near what we’d call a surplus or near levels that would push into a true buyer’s market, this is yet one more thing working into 2025 buyers’ favor at this time.
Work on Facts, Not Fear
These two seemly small but significant facts bring up a very important principle when it comes to your housing decisions in 2025 and that is to work off of facts, not fear. It reminds me of an ongoing yearly conversation I had with a Flagstaff resident who would gobble up internet speculation year after year that paralyzed their housing decision and ended up costing them easily into the six-figures in lost opportunity. While I can appreciate the desire to make sound investments and good decisions – it is important not to try to become a “day trader” with your housing decision. See the facts of your needs and available choices with homes and financing and make the best long-term decisions you are able to with the experts in your corner and avoid the speculation click bait or the free financial online advice that also sells “merch.” FBN
By Chris Hallows
For additional information or to schedule an appointment visit ChrisHallows.Benchmark.us or call 928-707-8572. The Flagstaff location is 824 W Rte 66 Suite A-3. Chris Hallows is the Branch Manager & Sr. Mortgage Advisor of Benchmark Mortgage Flagstaff. NMLS 306345 Ark-La-Tex Financial Services, LLC NMLS 2143 |Equal Housing Lender
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