The Federal Housing Authority (FHA) provided some news the housing industry can be thankful for this holiday season—an increase to loan limits across 3,011 counties. In particular, some of the markets that have faced the most rapid price appreciation over the past few years saw a sizable jump (see graph below).

This comes a few weeks after the Federal Housing Finance Agency announced higher conforming loan limits ($453,100 for standard and $679,650 for high-cost).

The FHA made changes to both the floor and the ceiling across the United States, now $294,515 (think lower-cost markets like Pittsburgh) and $679,650 at the high end, respectively. While these increased limits are welcome news, in many markets they are largely playing catch-up to rising home values. Seattle was the winner across the board for 2018, with an absolute value increase of $75,000 and a 13 percent change (more on this later). Other notable year-over-year movers include Salt Lake City (8.4 percent), Minneapolis (7.3 percent), and Denver (7.2 percent).

*This table looks at counties among the top markets in the United States. The full list can be found on the FHA’s website.

Breaking down the data, Meyers Research analyzed actively selling communities in these markets to see what the impact might look like assuming they could become FHA-approved. Markets like Orlando, Riverside, Minneapolis, Denver, and Seattle have the most potential to benefit from the higher rates. In these markets, there is a 30 percent–plus increase in the number of actively selling communities that fall under the new loan limits. In addition, these markets could see an increase in sales activity; the absorption rates for communities under the FHA loan limit compared with those above range from 38 percent higher in Riverside, California, to 76 percent more in Seattle.

Deanna Sihon, Meyers Research vice president of advisory in Seattle, explained, “While the new limits will help first-time buyers and the resale market, the average price for a new home in King County is almost $900,000 today. Even still, nine new communities will now fall under the new loan limits, helping those neighborhoods that are on the outer edges of King County where pricing is more affordable.”

While many in the industry argue that the increases are not enough, this is still a step in the right direction. In 2016, only 188 counties saw higher loan limits while that number increased in both 2017 and 2018. This increase indicates that the U.S. Department of Housing and Urban Development (of which the FHA is a part of) is listening, and we need to keep advocating for the industry.

Ali Wolf is the manager of housing economics for Meyers Research and a member of ULI’s Community Development Council (Green Flight).