Some people may have to look beyond the city limits of Washington and Union to buy a home now that a federal loan program is no longer available in Franklin County’s two largest cities.
“Generally, it is going to hurt the first-time buyers coming into the market,” said First State Community Bank President Scott Breckenkamp.
The U.S. Department of Agriculture Rural Development loan program is no longer being offered in the city limits of Union and Washington because the population of those cities is now too high under the federal guidelines, said Sharon Monzyk, loan officer with Franklin Mortgage Company in Washington.
The USDA loan program is good for younger couples who may not have the money available for a down payment, said Rachel Richardson, with Citizens Bank in Washington. It gives them a chance to stop renting and own a home, she added.
The program is still being offered in other parts of Franklin County. Richardson estimates that about 10 percent of her home loans for Washington and Union used the USDA program.
If those buyers still want to own a home in Washington and Union, they will have to explore other loans, such as FHA, Richardson said.
But other loan programs require at least 5 percent down, and some young couples do not have that money, Richardson said.
The government stopped offering the USDA program in Washington and Union about two weeks ago based on 2010 Census data, officials say. It was actually supposed to end earlier than that, but Congress extended the program. That extension ran out at the end of September.
The loss of the program in Washington and Union will have an impact on the local housing market, Monzyk said. It could lead to fewer people buying in the city limits of Washington and Union, she said. They may look elsewhere in Franklin County where the program is still offered or even buy across the river in Warren County, Monzyk added.
Richardson said she thinks it could specifically impact the sales of smaller homes in Union and Washington.
The USDA program is an excellent program for first-time buyers because it allows them to finance 100 percent of a home and build up equity, Monzyk said.
There was a proposal to Congress to extend the program again for areas that are now ineligible, Bank of Washington Senior Vice President Gene Anderson said. But the government shutdown has put many issues on hold, he noted.
It seems if there was going to be another extension that it would have been done before the program expired, Richardson said.
Other parts of Franklin County are still eligible for the program. But with the government shutdown, areas that still offer the program have not been able to get the loans processed recently, Anderson said.
Monzyk said she has heard that there have been efforts to keep the program going. But with the problems in Washington, D.C., Monzyk worries that it could become a “back burner” issue.
The Missourian attempted to contact USDA Rural Development, but no one was at the office due to the government shutdown and federal workers being furloughed.
Despite the loss of the USDA program in Washington and Union, low interest rates still create a favorable market for buyers, Monzyk said.
There are still some great loan programs available, said Franklin County Board of Realtors President Rachele Maczuk.
Maczuk agreed that the loss of the USDA loan program in Washington and Union could cause people to buy in others parts of the county where the loan program is still available.
Hopefully, people who want to buy in Union or Washington can just use another type of loan program, Maczuk said.
Selling Prices Rise
The average selling price of homes in Franklin County is about $5,500 higher now than it was in 2011.
From Jan. 1 to Oct. 8 of this year, the average selling price of homes in Franklin County was $138,441, according to Mid America Regional Information Systems. During that same time period in 2011 it was $132,948 and $133,420 in 2012.
“I’m happy with the way the year is turning out,” Maczuk said, adding that it is great to know the market is on the rise.
The average number of days on the market has stayed about the same over the past few years. Through Oct. 8, the average time for homes to be on the market is 136 days compared to 142 days during that same time period last year.
As of Oct. 1 there were 941 residential property listings on the market in Franklin County, and they had an average list price of $222,715, according to Mid America Regional Information Systems.