Realtors appeal FHA loan limits in Garfield County
December 11, 2009
GLENWOOD SPRINGS – Area real estate brokers are looking to the local governing boards to support them in an attempt to convince the U.S. Department of Housing and Urban Development to raise the FHA conforming loan limits within Garfield County.
The current limit for Garfield County on FHA loans is $425,000. But according to Sarah Thorsteinson, director of Glenwood Springs Association of Realtors Government Affairs, the limit, which is determined according to an area’s median home prices, should be around $480,000.
“This is a huge issue for home sellers and buyers in Garfield County,” she said.
Thorsteinson argues that because of the wide variance of home prices from Carbondale to Parachute, the limit does not accurately reflect the county’s housing market, and that homebuyers seeking FHA loans for homes in Garfield County communities within the Roaring Fork Valley are at a disadvantage to upvalley markets.
She is trying to “level the playing field.”
“Out goal is to achieve a conforming loan limit increase in our high cost area that will enable homebuyers to buy and sellers to sell homes in Garfield County, at undistorted real market prices, so as to achieve a level playing field in real estate markets in Garfield, as well as Eagle and Pitkin counties,” Thorsteinson wrote to HUD in a draft letter, which she expects to submit by Dec. 21 to meet the deadline for a 2010 limit increase.
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The nationwide FHA conforming loan limit is $417,000, according to Thorsteinson. However, in resort areas like Pitkin and Eagle counties, where the median home prices are significantly higher, Congress raised the loan limit in 2009 to $729,000 as part of the American Recovery and Reinvestment Act.
That created a vacuum of homebuyers and sellers in Glenwood Springs and Carbondale.
“What we are seeing in the Roaring Fork Valley is people looking to buy a home are leaving Carbondale and Glenwood and are going to El Jebel and Basalt to buy a similarly priced home, because they can have a smaller downpayment and get a lower interest rate,” with the higher FHA limit, Thorsteinson said.
Thorsteinson argues the limits were interpreted unevenly across Colorado, causing large discrepancies between counties.
She compared Garfield County, where the median home price for 2008 was reported at $384,750 by the assessor’s office, to Hinsdale, where the median home price for 2008 was reported at $290,000. However, according to Thorsteinson, while Garfield County’s conforming loan limit is $425,000, Hinsdale’s limit is much higher – $557,500.
“Clearly there is a discrepancy with regard to how the loan limits were determined in these two counties,” Thorsteinson wrote.
Thorsteinson points out that the median home prices in the eastern part of Garfield County are far higher than the home prices in the western portion. According to data from Land Title Guarantee Co., Thorsteinson reported that as of August 2009, the median home price was $720,000 in Carbondale, and was $449,500 for Glenwood Springs. Both of which are above the county median home price and the county’s current loan limits.
Basically, if the limit was raised, buyers could qualify for an FHA loan for a property in Glenwood or Carbondale, with a lower interest rate and less money down. That, Thorsteinson argues, would level the playing field for buyers and sellers in Garfield County with neighboring Pitkin and Eagle counties, and could also spur home sales in the lower Roaring Fork Valley.
If the area from Aspen to Parachute could be designated a micropolitan statistical area (MSA), the FHA could raise Garfield County’s limit to Pitkin and Eagle county levels, according to Thorsteinson. That is what she is hoping for. However, the Office of Management and Budget, and the U.S. Census, will not be reviewing any MSA requests until after the 2010 census is complete, Thorsteinson said.
“That is why we are trying to get the limit increased to $480,000 for 2010,” she said.
Thorsteinson asked the Glenwood Springs City Council for a letter of support on Dec. 3, and expects a representative to ask the Board of County Commissioners for support on Monday. She said Carbondale town trustees have already given support, and that she has also asked Sen. Michael Bennet, and State Rep. Kathleen Curry, D-Gunnison, for support.