I hope everyone is prepared for the Christmas holiday and looking forward to some time off. This will be my last blog of 2022 — what an incredible year!
Since this is the last post of the year, I will be sharing some South Bay real estate resolutions that various South Bay residents can consider in their real estate aspirations and conforming loan limit increases for 2023.
Updated 2023 Conforming Loan Limits
There was a time when conforming loan limits stayed stagnant for years and years.
Thankfully, that is a thing of the past with the Federal Housing Finance Agency (FHFA) committed to keeping pace with real estate growth/inflation to help people achieve homeownership.
I want to share the updated high-cost area conforming loan limits that will apply to our expensive South Bay home marketplace.
| Property Units | 2023 Limits | 2022 Limits |
| 1 | $1,089,300 | $970,800 |
| 2 | $1,394,775 | $1,243,050 |
| 3 | $1,685,850 | $1,502,475 |
| 4 | $2,095,200 | $1,867,275 |
For many, these increases may seem insignificant, but they are actually a big deal for buyers trying to break into the market, along with specific pockets that will benefit in the form of appreciation whether now or into the future.
Buyers now gain $120,000 in additional buying power with favorable conforming loan limit underwriting and rates. Oftentimes, we will see buyers NOT buy higher than $970k because jumbo rates go higher, or the qualifications/down payments become too difficult.
This single-unit increase will help buyers purchase more expensive condos, townhomes, and even specific single-family residences in 2023.
What’s more, are the valuable increases to duplex, triplex, and fourplex purchases. I think this is the biggest deal of all, and not just for buyers.
Of course, for buyers, it is especially significant when it comes to income properties. Thanks to conforming lenders giving credit to rents as added income, many buyers can purchase a much more expensive property than one unit since their income calculations can increase significantly. I always urge buyers to consider the advantages of buying/living in a unit of an income property because of the powerful wealth creating effects.
In addition, there are many markets that will benefit. I see pockets with duplexes that tend to trade around the conforming loan limit, and the same goes for 3-unit and 4-unit properties. These favorable loan terms boost those areas.
For instance, you will see Old Torrance and Lomita duplexes trade in the $1.2 million ranges, but with an increase of loan limits to almost $1.4 million, that will help push property prices higher over the long term.
You’ll also see triplexes in Redondo Beach in the $1.5 million range benefit with limits going to $1.7 million.
Is it a sure-fire increase right away? No. But over the loan term, conforming loan limits can really drive or support markets.
Look for real estate pockets that trend around conforming limits and work to invest in the properties. Additionally, owners looking to ADUs or get rid of mortgage insurance, these limit increases will have a positive effect on you as well.
Study these new limits and how they can help you acquire your first home, transact with intention, or refinance to your benefit.
New Year Real Estate Resolutions
Buyer Resolution
Patience, patience, patience.
That is the theme for buyers and my recommendation on their 2023 resolution.
Over the past few years, we have gotten used to record prices, multiple offers, and low inventory. The market shift is finally giving back negotiating power to buyers. The best deals are coming to those who wait.
Over-priced property that sits on the market, cuts multiple times, and/or falls out of escrow are listings that are ripe for the picking. You must be willing to let a few get away, but the ones that have extended listing periods with negative moves are the ones to work on for amazing deals.
Additionally, patience also means not having to jump on the first property you like. Be picky (aka patient) and when the right property comes, you can be ready to beat out others on what might be a competitive property.
Seller Resolution
Don’t sell if you don’t have to.
I believe 2023 is going to be a challenging market for property sellers. We are already seeing declining values for investment properties thanks to interest rates, and there are meaningful declines in pockets of the Palos Verdes home market.
If you can trade from one property into a more valuable or better returning property, then amazing, I urge people to do that.
But without a good reason to sell, I suggest you wait until the market gets on more sound footing.
Renter Resolution
Call a lender even if you don’t think you can buy, and consider a duplex.
Too many renters think they have to meet certain hurdles made up in their own mind. Stop that!
Even if you do not think you are ready to buy, I suggest you call a local, qualified lender to see if you can or how close you are. The beauty of this is that many will be surprised what they can afford to buy, or at the very least, see how close they are to buy so you can set saving and income goals in 2023 to purchase in 2024.
Additionally, if you consider buying a duplex or triplex, that rental income gets added to your own income. Many will be astonished that they can purchase if they are willing to live in one unit of an income property, especially via the route of an FHA loan in surrounding markets to the beach and Palos Verdes.
Investor Resolution
Exploit high interest rates.
We are seeing income property values take hits in commercial apartment buildings. It also looks to be happening in triplex and fourplex offerings. Pair record high prices with newly surging interest rates and investment property deals simply do not pencil — so the prices must come down!
As an investor, this is your time to offer on property that will be discounted to 2022.
Make sure the numbers still pencil to your liking and go score some deals at prices below past comparable sales. You’ll pick up a great property and it would be even sweeter if rates came down in the future with a refinance.
Conclusion
I am grateful for the wonderful year that was 2022. Whether you read my blog weekly, listen to my podcast, or follow my reels — I appreciate you!
To family, friends, and clients that supported my business and helped us close over $47 million in transactions this year — thank you so much. We could not have done it without you.
Wishing everyone a Happy New Year and a prosperous 2023.
Cheers.