U.S. government to back mortgages of $1M in priciest areas. How about South Florida?

The U.S. government raised its mortgage limits for 2023 to just over $1 million in some of the nation’s priciest counties. Florida fell short of that cap, despite experiencing historically high real estate sales prices this year.

The federal government announced the new loan limits for government-backed loans on the Federal Housing Finance Agency’s (FHFA) website this week. Miami-Dade, Broward and Palm Beach counties moved to $726,200, up from this year’s $647,200. Monroe County got the biggest bump and has the highest ceiling in the state, given sales prices and loan requests average higher than elsewhere in Florida. Buyers can seek a government-backed mortgage in Monroe County up to $874,000 next year, an increase from $710,700 in 2022.

The limits fall short of the new caps of $1.089 million set for some communities in California, Wyoming, New York, New Jersey, Massachusetts, Pennsylvania, West Virginia, Virginia, Maryland, Alaska, Hawaii, Idaho and Utah. The new limits go into effect in January.

“Florida has seven out of the 10 metros with the highest appreciation. The dollar amounts are high,” said William Doerner, a supervisory economist at the FHFA, “but it’s not high enough to exceed the baseline value.”

The FHFA set the new ceilings by comparing the median sales price changes between the third quarter of 2022 and the third quarter of 2021. Although the average increase in home sales prices was 12.4%, Florida metro areas had among the highest annual jumps ranging from 20% to nearly 30%. The agency also looked at the median loan price, and the Miami, Fort Lauderdale and Palm Beach metro areas had a median loan price of $485,000.

Home sales prices reached historic highs this year in Miami-Dade. The median sales price for a house peaked in June, hitting $579,000. Sales prices have since slightly cooled to $575,000. Miami-Dade and other counties across Florida experienced a wealth migration during the pandemic when people from across the country — primarily the Northeast — traded their home state for Florida’s warmer winter, lower taxes and looser COVID-19 restrictions. The activity increased demand and home prices.

The new caps in Florida — far below the $1.089 million in other states — are a blessing in disguise for South Florida’s housing crisis, said Ken H. Johnson, a finance professor at Florida Atlantic University. The limit gives slightly more of a wiggle room for some buyers without encouraging dramatic price increases on the part of sellers.

“It helps keep prices down and makes houses more affordable,” he said. “If we had a higher limit, then people would bring up the price.”

Many home buyers in South Florida rely on Fannie Mae or Freddie Mac conventional loans to close a deal. Keyes Co. President Mike Papas said about 80% of buyers go the conventional loan route, although more loan options exist today compared to the past.

South Florida is expected to reach a higher limit down the road, Doerner said.

South Florida will likely reach a limit of over $1 million, Doerner said, if the median sales price for houses continues to rise. “It’s going to take a bit of time, but — if house prices go up — it will eventually happen.”