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Jergler: New Realtor group president named

November 29, 2011|By Don Jergler

A. Collectively, we Realtors remain committed to the value of homeownership and policies that support it like the mortgage interest deduction. Unfortunately, we have some in Congress who would eliminate this critical tax deduction and in doing so give away the economic and social benefits the home ownership is proven to create. For example, real estate contributes more than $2 trillion to the U.S. GDP, creating one new job for every two homes sold. And there are other benefits that defy valuation. For example, homeowners are more involved in their children's academic performance and as a result their kids do better in school. Homeowners also move less, which adds stability to the neighborhood. In fact, homeowners are more likely to vote, more likely to volunteer and more likely to establish crime prevention programs in their community.

Q. The U.S. House and Senate recently restored the Federal Housing Authority's conforming loan limits to the level before they were allowed to expire at the end of September. As a result, the limits will rise to 125% of the area median home price — up to a maximum $729,750 from $625,500. How do you think this will affect Orange County's real estate market?

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A. Loan limits have a profound effect on the housing market, especially in high cost areas like Orange County where the median home value is two or three times higher than in other parts of the country. When Congress lowered the limits, they forced borrowers into higher rate "jumbo mortgages" even though they represent no greater risk for default. Jumbo borrowers typically have better employment histories and credit scores and as a result have lower default rates. So when Congress lowered the loan limit, they basically punished these families for working hard, saving and being responsible.

Q. What market fundamentals make Orange County unique in terms of real estate?

A. The key right now is the economy and job creation, possibly followed by underwriting standards. Historic low interest rates may not last, especially if the economy begins to add jobs. Right now rates are more likely to increase over the next few years than prices to fall further, which means that purchasing power may be as good as it gets.

Q. What will it take for the housing market to finally return to a normal, healthy state, and when do you see that happening?

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