U.S. economy still ticking, just barely
GDP rose by only 0.6 percent last quarter, the slowest rate in one year.
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There may also be some signs that San Diego, which went into a housing slowdown earlier than most areas, is starting to improve. For one thing, buyers from Asia and Canada are picking up properties. "The Korean government took restraints off their citizens so they can own property outside their country, so that has helped," says Sherman Harmer Jr., president of Urban Housing Partners Inc. in San Diego. "We have seen a doubling in traffic in the last two months."
Once the economic stimulus package passes Congress, as it is widely expected to, Mr. Harmer thinks that housing in San Diego will benefit from one of the package's provisions, which will increase the size of loans that can be purchased by Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA). Under the current rules, a high-quality loan can be sold to one of the government agencies if it is under $417,000. Under the new provision, the loan limit would temporarily go up to $729,750.
"It will allow buyers to make $30,000 less in income to qualify for a loan and will result in a $600-a-month smaller payment," Harmer says of the proposed change.
San Diego County is also benefiting from a continued increase in jobs. The county expects to add 14,000 jobs this year, Harmer says. The growth is coming from biotech firms, which are benefiting from state funding of stem-cell research, and clean-tech companies.
Later this year, she says, tourism on the West Coast will get a boost when China allows its citizens to visit the US as part of a special visa program for group tours. International travel represents 18 percent of L.A. County's visitors but 30 percent of the tourist spending. "We like people with fat wallets," Ms. Martinez says.