Mar. 14: Primer on conforming loan limits; what U-Haul stats tell agents; state capital rankings

Rob Chrisman

Rob Chrisman began his career in mortgage banking – primarily capital markets – 31 years ago in 1985 with First California Mortgage, assisting in Secondary Marketing until 1988, when he joined Tuttle & Co., a leading mortgage pipeline risk management firm. He was an account manager and partner at Tuttle & Co. until 1996, when he moved to Scotland with his family for 9 months. See more

This is great news. Americans have regained most of the wealth lost when the real estate bubble burst. Homeowners’ equity has more or less doubled since the lows of 2009. Since 2013, real estate has outperformed ther S&P 500 by 16 percentage points.


But I received this note. “Why haven’t Fannie & Freddie raised the conforming loan limit to something higher than $417,000? We really need it here where I live and work.” The rally just now making up for the drop in the median price of a home from 2008 through a few years ago. But the question is better directed to the FHFA, conservator of F&F. Conforming loan amount changes typically happen around Thanksgiving, and conventional conforming loan limits are set using a formula proscribed by the Housing and Economic Recovery Act of 2008. As you know, under that formula loan limits are based on annual 3Q-to-3Q changes in the Home Price Index HERA required FHFA to establish.


“In determining 2016 maximum loan limits FHFA did not change the baseline maximum conforming loan limit of $417,000 because, according to the expanded-data HPI, national average home prices in the third quarter of 2015 remained approximately 3.7 percent below price levels in the third quarter of 2007.3 After a period of declining home prices, HERA requires that prior price declines be fully offset before a loan limit increase can occur. During the recent financial crisis, the average U.S. home price declined substantially and, despite recent price increases (the expanded-data index grew roughly 5.8 percent over the last four quarters),4 a small deficit remains.”


And loan limits in high cost areas are also covered under HERA. “HERA provisions set loan limits as a function of local-area median home values. Where 115 percent of the local median home value exceeds the baseline loan limit, the local loan limit is set at 115 percent of the median home value. The local limit cannot, however, be more than 50 percent above the baseline limit.”


Consumers are becoming a touch less bullish on future home price appreciation, according to the latest Fannie Mae National Housing Survey. They anticipate that home prices will appreciate 1.7% next year, as opposed to 2.2% last month. We are certainly seeing some signs of softness in the oil states as well as the high end. Their view on the economy is about the most negative it has been since the big equity sell-off in August. 56% believe the economy is on the wrong track, and only 37% believe the economy is on the right track. This statistic explains the appeal of Sanders and Trump these days, two candidates who would ordinarily get zero traction.


U-Haul movers and takers:


What better way to discern the most popular state to move too than U-Haul statistics. I think It’s pretty ingenious really to track U-Haul activity because quite frankly, you gotta’ have a U-Haul to haul your stuff for the big move.


North Carolina took the top spot in U-Haul’s ranking of states with the largest number of newcomers in 2015 securing the biggest net gain of one-way U-Haul truck rentals entering the state versus the number leaving the state during the past calendar year. Ohio, Florida and California rounded out the top five, while Illinois saw the most net departures. U-Haul says the migration trends data was compiled from more than 1.7 million one-way U-Haul truck rental transactions that occurred in 2015.


Washington, New York, Arkansas, Maine and Utah complete the top 10 growth states. While U-Haul migration trends don’t correlate directly to population or economic growth, the data is a strong gauge of how well states are attracting and keeping residents.


State Capitals ranked:


With only 17 state capitals being also the largest cities in their respective states and nearly a fifth of Americans still preferring to live in smaller areas, the personal finance website WalletHub conducted an in-depth analysis of 2016’s Best & Worst State Capitals.

To identify the state capitals that offer the best of an ideal city, WalletHub’s analysts compared the 50 state capitals across 35 key metrics, ranging from cost of living to K–12 school-system quality to number of attractions.


The best ranked state capitals, #1-10 are as follows: Austin, TX, Lincoln, NE, Bismarck, ND, Madison, WI, Raleigh, NC, Boise, ID, Montpelier, VT, Pierre, SD, Helena, MT and Columbus, OH. The worst ranked, #41-50 are: Boston, MA, Baton Rouge, LA, Dover, DE, Honolulu, HI, Trenton, NJ, Providence, RI, Jackson, MS, Montgomery, AL, Carson, NV and Hartford, CT.


The potential significance of this data, relative to real estate transactions, is the correlation between key factors that draw people to specific states. Some of the comparisons noted are facts like Juneau, Alaska, has the highest cost of living-adjusted median household income, $64,893, which is three times greater than in Hartford, Conn., the place with the lowest, $23,564.


Hartford, Conn., has the highest unemployment rate, 8.9 percent, which is five times greater than in Bismarck, N.D., the place with the lowest, 1.9 percent. Indianapolis has the highest K-12 school-system quality, which is nine times greater than in Sacramento, the place with the lowest. Harrisburg, Pa., has the highest number of restaurants per 100,000 residents, which is five times greater than in Phoenix, the place with the lowest.


Denver has the highest percentage of millennial newcomers, 8.1 percent, which is 2 times greater than in Jackson, Miss., the place with the lowest, 3.6 percent. Little Rock, Ark., has the highest violent-crime rate per 1,000 residents, 13.9, which is 10 times greater than in Cheyenne, Wyo., the place with the lowest, 1.4.


If you are interested in reading more details, view WalletHub’s 2016 Best and Worst State Capitals.



A driver is stuck in a traffic jam on the highway outside Washington DC.

Nothing is moving. Suddenly, a man knocks on the car window.

The driver rolls down the window and asks, “What’s going on?”

“Terrorists have kidnapped the members of Congress and they’re asking for a $100 million ransom! Otherwise, they are going to douse them all in gasoline and set them on fire. We are going from car to car collecting donations.”

“How much is everyone giving, on average?” the driver asks.

“Roughly a gallon.”





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