Special offer

Stimulus Plan a Big Miss for California

By
Real Estate Agent with M Realty

The Homeowner Affordability and Stability Plan was recently released. It attempts to address some of the issues that the current housing market is struggling with and I have been through some of the details and as it currently is written, I'm disappointed.

Near the end of December last year I posted the article about about the top 10 worst housing markets in the country, according to CNN. Unfortunately, 8 out of 10 were in the state of California. Now keep in mind, California is a massive factor in our national economy. Our Gross Domestic Product is larger than all but 8 countries in the world. You will not fix this housing crisis if you don't address the state of California.

The plan that came out has one elemental problem (there are others but this one is a deal breaker) - it only applies to Fannie Mae/Freddie Mac backed loans. Translation: if the loan is over $417,000, no deal.

Let's examine this just a bit. In most parts of Orange County, in 2004, 2005, 2006, and 2007, you couldn't get much more than a very small condo for $417,000. You couldn't buy a single family home in most parts of Orange County for under $600,000. The people that are most at risk are the people that purchased during that period of time- and the big Affordability Plan - doesn't apply to them.

Look at the numbers for the big California markets - Los Angeles, San Diego, the Bay Area - it doesn't change. So call me crazy, but I don't get it.

Hell, I'm happy for the folks in the midwest that this has an impact on. I'm happy for the people that will benefit from it. But I'm not sure this solves the problem at hand.

You can solve this for the folks in Kansas, but if you leave out 8 out of 10 of the worst housing markets in the country, are you really addressing core of the problem? Just sayin'.

 

Originally posted on OC Real Estate Voice.

Comments (1)

Robert Havana
Park and Protect- Alberta Real Estate License Parking - Calgary, AB
Alberta Real Estate License Parking

I agree that the govt plans in the US and Canada have been pretty poorly designed.  The Canadian plan is to give homeowners a $1350 tax credit if they spend 10k renovating their homes in 2009.  A pretty crappy plan as far as real estate professionals are concerned since it encourages staying put and renovating, discourages moving, and after people renovate they are again going to be far less likely to want to move.

Feb 25, 2009 05:24 PM