It is very tough to “outsave” an appreciating real estate market.

Duane Duggan, Realtor and Author RE/MAX of Boulder

As 2021 begins, today’s homebuyers are frustrated with the scarce inventory of homes to choose from across all price ranges. Shrinking inventory has put upward pressure on home prices across the country. In fact, the Federal Housing Finance Agency (FHFA) determined that the average U.S. home value increased by 7.42% between the third quarters of 2019 and 2020. As a result of the increase in values during that time frame, FHFA announced that the maximum baseline conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac will increase for 2021. A conforming loan is a loan which meets the criteria to be purchased by Fannie Mae or Freddie Mac.

Increases in loan limits are determined for each county in the nation. The limits for Boulder County for 2021 are as listed in the chart below. Yet the 2019 and 2020 history of home prices for a single-family home in Boulder County is as follows: According to the chart below, the average Boulder County single-family home sold for $799,844 in 2020, meaning the new 2021 loan limits are helpful, but in general, are still not enough to enable a homebuyer to purchase the average-priced home without a large down payment.

When a home loan larger than a conforming loan is needed, a homebuyer can seek what is commonly known as a “jumbo loan”. Jumbo loan pricing and availability vary with the market. The interest rate and credit score requirements might be higher than those of conforming loans.

Another strategy that might be available to help homebuyers who need a loan which is just over the conforming loan limit is to apply for both a first and a second mortgage. This involves qualifying for a first mortgage at the conforming loan amount and a second mortgage to make up the difference between available down payment and the conforming loan limit. Your licensed mortgage loan officer can help you determine if this option is available for you.

Federal Housing Administration (FHA) Loan Limits Also Increase in 2021
Homebuyers who qualify for FHA loans will also get the benefit of the new higher loan limits. In Boulder County, the loan limits will be the same as the Fannie Mae/Freddie Mac limits listed to the right.

Interest rates boost purchasing power the most
Interest rates are still at historical lows, helping homebuyers cope with rising prices. According to Jessica Shanahan, mortgage loan officer with Premier Lending, every time the rate changes .25%, the purchasing power of a homebuyer changes about 3%. According to Freddie Mac, the high interest rate in 2020 was March 19th when the 30-year fixed rate was at 3.65%. As of January 28, 2021, the interest rate is being reported at 2.73%. Almost a full percent less! This difference has increased a homebuyer’s purchasing power during that timeframe by about 10 to 12%.

It is very tough to “outsave” an appreciating real estate market. By that, I mean the pace of home price escalation exceeds a homebuyer’s ability to save for a down payment. Therefore, it makes sense to get started in the real estate market as soon as you can. Contact your Realtor and a mortgage lending professional to determine what current financing options are available to help you become a homebuyer – and in turn a homeowner – as soon as possible.

By Duane Duggan. Duane has been a Realtor for RE/MAX of Boulder in Colorado since 1982 and has facilitated over 2,500 transactions over his career, the vast majority from repeat and referred clients. He has been awarded two of the highest honors bestowed by RE/MAX International: The Lifetime Achievement Award and the Circle of Legends Award. Living the life of a Realtor and being immersed in real estate led to the inception of his book, Realtor for Life. For questions, e-mail [email protected],
call 303.441.5611 or visit