Builders and developers in many higher-cost housing markets still recovering from the bust—including the Inland Empire, Las Vegas, Sacramento, Calif., and Phoenix—say the price limits set by the federal government make it nearly impossible to deliver homes that cater to buyers looking to purchase with FHA loans.
By Chris Kirkham | The Wall Street Journal
At the New Haven housing development in Ontario, Calif., Brookfield Residential is building 189 townhomes priced below $378,000.
So far, the moderately priced homes have sold at nearly twice the rate of others listed above the $378,000 mark.
That isn’t an arbitrary price. It marks the upper limit for a buyer to qualify for a low-down-payment, federally insured mortgage in Southern California’s Inland Empire, the suburban expanse east of Los Angeles.
Such mortgages, known as Federal Housing Administration loans, have become a primary vehicle for first-time buyers and those rebounding from the housing crash who have less-than-stellar credit and lack the 10% to 20% down payment required for most conventional mortgages.