The economic stimulus package passed by Congress the first week of February may significantly boost the real estate market, according to the National Association of Realtors.
"We believe the economic stimulus bill that Congress sent to the president today is strong legislation that will quickly impact the nation's families and economy," said NAR President Richard Gaylord. "We are pleased that the Federal Housing Administration (FHA) and the Fannie Mae and Freddie Mac (GSE) loan limits have been increased, even if only temporarily. This will be a major stimulus for the housing industry and for people who want to own a home."
Mortgage Bankers Association Chairman Kieran P. Quinn also hailed last week's passage in the House and Senate of an economic stimulus package, saying: "This is an important step toward helping the U.S. economy. The housing components of the stimulus package should provide much needed liquidity for the mortgage markets, especially in areas with high housing costs. The temporary increase in the loan limits for FHA, Fannie Mae, and Freddie Mac will help consumers by providing important financing options, and will help restart the securitization market for higher value loans."
Increasing FHA loan limits will help an additional 138,000 Americans achieve the dream of homeownership and will allow nearly 200,000 homeowners to refinance and potentially keep their home, according to NAR research. In addition, NAR believes that increasing the loan limits for Fannie Mae and Freddie Mac will bolster the severely stressed housing finance market by immediately infusing much needed liquidity into the nation's mortgage market. "While such an increase will not solve the full range of housing challenges, it will play a vitally important role in improving the nation's economy and making the dream of homeownership more attainable for thousands," said Gaylord.
An economic impact study conducted by NAR earlier this month estimated that increasing the conforming loan limits would result in as many as 500,000 refinanced loans and could help reduce foreclosures by as much as 210,000. In addition, over 300,000 additional home sales could be generated, housing inventory would be reduced and home prices would be strengthened by two to three percentage points. "These are real results and will have an immediate and sustainable impact for families across our country," said Gaylord.