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Median prices push FHA cap in Manteca & Turlock
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The closing price for the typical Manteca resale home today stands at $266,200.

Statistics from Zillow show that the median selling price has increased 38.9 percent over the past year.

The closing price for the typical Turlock resale home today stands at $220,600.

Statistics from Zillow show that the median selling has increased 28.3 percent over the past year.

This is not good news for buyers who currently live in the 209 for two reasons. The obvious reason has to do with the fact homes are costing more and therefore potential buyers will either be getting less house for their buck or may be squeezed out of the market. The less obvious reason is because median home prices are closing in on the FHA loan limit.

This is important because the vast majority of first-time home buyers rely on FHA loans with somewhat easier qualifying rules and significantly lower down payment requirements. A $300,000 home would require a $10,500 down payment based on the 3.5 percent minimum required for a FHA loan.

The current limit for a FHA loan in San Joaquin County including Manteca is $304,700. In Stanislaus County including Turlock it is $276,000.

If Zillow is correct, Manteca prices will increase 16.4 percent over the next year meaning the median sales price of a home will surpass the FHA loan limit. In Turlock, Zillow’s predicted 14.1 percent increase in the coming year would bring the median selling price within $23,000 of the cap.

That means significantly less homes on the resale market will be available to buyers who need to use FHA loans. The situation is worse in Manteca and Turlock compared to the large cities in each county — Stockton and Modesto — where the median selling  price is tens of thousands of dollars lower.

In 2008, the FHA loan limit was $488,000 in San Joaquin County and $423,000 in Stanislaus County. That was slightly ahead of the median in Manteca and Turlock for their respective counties.

This time around, the FHA is showing less enthusiasm for increasing loan limits as liberally as they did in the run-up to the housing crisis.

That means less people will be able to buy homes in the coming months.

The bottom line is simple: If you are thinking about buying and you don’t have a ton of money lying around (or in retirement accounts you can borrow against) you might want to get serious and start looking for a home now.

If you wait, you might miss the train.