Stimulus Plan May Help California Real Estate
STEVE INSKEEP, host:
Here in the U.S., the Senate takes up a stimulus package this week aimed at putting more money into Americans' pockets. One of the measures in the package targets home buyers. It aims to stabilize the nation's highest-priced housing markets by increasing the size of mortgages backed by federal agencies Fannie Mae and Freddie Mac.
NPR's Elaine Korry reports from one of those high-priced markets, San Francisco.
ELAINE KORRY: The median price of a home in many parts of California is above $600,000. But the cap for what are called conforming loans backed by the government is nearly $200,000 less. That's forced many California home buyers to apply for so-called jumbo loans, which carry higher interest rates, as much as a full percentage point more. Under the stimulus plan, the limit for conforming loans would rise substantially, saving borrowers $400-500 a month.
David Crane, an adviser to Governor Schwarzenegger on economic growth, says access to cheaper credit is exactly what California needs.
Mr. DAVID CRANE (Advisor): It's huge; it's really the single largest issue affecting our economy.
KORRY: According to Crane, this proposed change alone could boost economic growth throughout the state.
Mr. CRANE: Housing pervades everything because to the extent that people can't finance their homes or they're paying more for their credit than they would otherwise pay, they spend less at the local store, the local dry cleaner, or you know, the local restaurant.
KORRY: Congress takes up the economic stimulus package this week.
Elaine Korry, NPR News, San Francisco.