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The announcement of an increase for a single-family mortgage loan limit of $322,700 to $333,700 in 2004 by Fannie Mae and Freddie Mac could benefit 4,100 families in California, according to an analysis by the California Association of Realtors. While the increase will allow more leeway for some buyers, the cost of housing in California is still a large factor in housing affordability for many potential homeowners.
"While this is good news for many home buyers, Fannie Mae's and Freddie Mac's new loan limits do not go far enough to improve homeownership opportunities in California," said California Association of Realtors President Ann Pettijohn. "Conforming loan limits need to more accurately reflect the cost of housing in California, where the median price of a home is more than double that of the nation."
The current median home price in California is $381,200, an increase of 17 percent compared to a year ago and more than 14 percent higher than the national conforming loan limit of $333,700. In addition, California has 14 counties with a median-home price above the national conforming loan limit.
Based on its 2004 sales projection, the association expects that 390,800 sales in the state will fall into the price range implied by the higher loan limits, an increase of 11,800 homes over the 2003 loan limits. The $11,000 increase in the single-family mortgage loan limit translates into an additional 4,100 households able to take advantage of savings provided by having a Fannie Mae or Freddie Mac mortgage.
Regionally, an additional 1,100 households in the San Francisco Bay Area and 1,800 households in the five-county Southern California region will be able to benefit from the increased loan limits, according to association economists.
The California Association of Realtors is supporting H.R. 3507, the Improving Homeownership Opportunities in High Cost States Act of 2003. This legislation will enable home buyers in California and other states to benefit from the federally chartered secondary market opportunities designed expressly for areas with an exceptionally high median-home price. Current law recognizes high-cost states and their need for an increased conforming loan limit, but is currently restricted to Hawaii, Alaska, Guam and the Virgin Islands. H.R. 3507 would allow the local economic climate of a state to dictate the necessity of an increase in its conforming loan limit.
Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to jnewton@jnpr.com.
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