BISMARCK, ND, Apr 26, 2011 -- Jasper Schneider, USDA Rural Development State Director, today announced that the statewide direct home loan limit in all North Dakota counties will increase from $147,500 to $179,000. The change in USDA policy will allow more low- and moderate- income earners to purchase housing.
Schneider touted today’s increase as a step in the right direction for North Dakotans looking into home ownership. The new loan limits help reach the ‘sweet spot’ of a moderate priced home which has risen in recent years due to the increase in demand and associated costs of building. Access to capital and appraisal gaps have created challenges in using traditional financing options.
“The combination of high demand and low supply for quality housing has created a sharp increase in the price of housing in many rural communities,” Schneider said. “This increase will also help alleviate the cost barrier to construct affordable homes because of rising material costs and labor wages.”
The direct home loan limit had not been changed since 2005 and now is increasing by $31,500, which is a 21 percent increase. The new limit is effective immediately and will also apply to Corson County in South Dakota as it is included in North Dakota’s service area for Native Americans. As established last year, the direct home loan limit in Williams County will remain at $224,590. This limit was raised citing that the growth of energy production has led to a dramatic increase in the cost of housing and a shortage of available units to support the surrounding economy.
To determine the appropriate area loan limit, a market analysis was conducted of statewide residential property sales. The analysis included gathering data from local real estate companies, brokers, building contractors and developers, lenders, city leaders and other regional partners. Based on the collected data, it was determined that the cost of construction for a modest home in the state averaged $179,000.