A federal spending deal signed Friday by President Barack Obama should help the Beaufort County housing market continue to recover, according to a local real estate expert.
The legislation restores higher mortgage limits for loans backed by the Federal Housing Administration to levels created in 2008 as part of the stimulus package.
When the stimulus program expired Oct. 1, Beaufort County's limit for single-family homes fell to $346,150. Friday's deal restored that limit to $387,500 for two more years.
In some areas of the country with especially high real estate prices, the FHA limit will increase from $625,500 to $729,750.
The FHA backs about one-third of U.S. mortgages and has played a large role in loan financing during the recession as private financing became more difficult to obtain.
Although most homes in the county sell at prices below the loan limit, caps on FHA loan amounts can affect all price ranges, so higher limits are seen as a positive by the real estate industry.
"This absolutely helps a great deal, and makes home buying much easier," said Karen Ryan, president of the Hilton Head Association of Realtors. "We need every tool in our tool kit today."
Ryan said her office rarely deals with FHA loans -- explaining that the average home price in Hilton Head is about $445,000 -- but believed the news would be especially welcome in other parts of Beaufort County.
"FHA loans are primarily used by first-time home buyers," Ryan said, adding that potential buyers in Bluffton and Beaufort might benefit most from the change. "You don't have to have the credit (for a FHA loan) that you would need for more traditional financing."
Beaufort is one of 11 South Carolina counties designated as "high-cost" by the U.S. Department of Housing and Urban Development, the FHA's parent agency. These areas, so identified because of their relatively high average property values, each have higher mortgage limits than the $271,050 standard limit that applies to the state's other 35 counties.
According to a recent report from S.C. Realtors, the Hilton Head area has the strongest rate of home sales in the state, with year-to-date sales up 8.2 percent over 2010.
Among South Carolina's congressional delegation, only Republican Sen. Lindsay Graham and Democratic Rep. James Clyburn voted for the bill. Opponents of reinstating the higher limits did not want to see the federal government more involved in mortgage financing.
"Those who want to increase FHA limits argue that the action is needed to jump-start the housing market, but this approach has already failed," Sen. Jim DeMint, R-S.C., wrote before the vote in a blog on Redstate.com.
David Slade of the (Charleston) Post & Courier contributed.
Follow reporter Grant Martin at Twitter.com/LowCoBiz.