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California residents will have reason to rejoice this tax season!

The economic stimulus package announced this week includes rebates between $600 to $1,200 for most Californian families plus $300 per child. The big news that is relevant to the California real estate market is the fact that the plan also includes a drastic reduction in rates for loans between $417,000 and $729,00.

Jumbo loans (Loans over $417,000 in California) are generally priced at a much higher interest rate than loans for homes at a lower price point. The interest rate on a jumbo loan can be 1.5%+ more than a loan for a lesser amount. This mean that many homes in California markets are just plain unaffordable for consumers looking to buy - even in the current market.

The stimulus plan effectively raises the cap for conforming loans (loans that up until now were capped at $417,000) and the corresponding interest rate associated with them. This will give California markets a much needed boost in affordability as more consumers become qualified to purchase.

Hopefully this will be enough to begin to remove consumers from the sidelines and into the buyers category.

This entry was posted on Sunday, January 27th, 2008 at 1:39 pm and is filed under Economy, Market. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.