Housing Stimulus Urged to Halt Erosion of US Economy
Leading one of the largest coalitions of housing advocates ever assembled in the United States, NAHB is pushing for a housing stimulus plan that will stabilize the marketplace and address the ongoing crisis in the financial markets that is constraining the flow of credit the nation needs to arrest a deepening recession.
Almost 100 organizations, home building companies and manufacturers have joined in support of Fix Housing First, which is pressing for legislative action to provide short-term, targeted incentives that will encourage consumers to buy homes again and end the dangerous downward housing market spiral that has now taken hold of the entire U.S. economy.
As the key ingredients of a housing recovery plan to revive the American economy, NAHB, as part of the Fix Housing First coalition, is urging the Congress to support enhancements to the home buyer tax credit and provide below-market 30-year fixed-rate mortgages for home purchases.
"In 1975, Congress passed a short-term $2,000 tax credit for all new homes ($12,000 adjusted for today's median home prices) coupled with subsidized mortgage rates," according to the coalition. "The stimulus jump started the depressed economy and the effects continued long after the measure expired."
"Entering this holiday season, we saw a sobering loss of more than half a million jobs in November, and major job cutbacks among the nation's top employers are being announced daily," said NAHB President and Chief Executive Officer Jerry Howard. "We need to put a stop to this dangerous erosion on Main Street before it grows out of control. Fixing housing is the obvious starting point for putting the country back to work and restoring confidence in the inherent strength of our economy," he said.
"We are leaving no stone unturned in conveying to our government and the public the message that a housing stimulus is urgently needed, and that restoring demand for housing is the fastest and most effective way of reviving the economy," Howard said.
In the opening weeks of this month, NAHB's lobbying, grassroots, public affairs and economic advocacy team has been providing support to the "Fix Housing Now" endeavor by conducting high-level meetings with key staff members on Capitol Hill and President-elect Obama's transition team; communicating with top members of the current Administration, including Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart; alerting NAHB members of the critical importance of the stimulus campaign; stepping up news media coverage; and working with the coalition on full-page advetisements in major publications.
The housing stimulus proponents are calling for significant enhancements to the current $7,500 tax credit for first-time home buyers. Among the improvements:
- All primary home purchases between April 9, 2008 and Dec. 31, 2009 would be eligible.
- The credit amount would be increased to 10% of the price of the home, capped at 3.5% of FHA loan limits, bringing the credit to a range of roughly between $10,000 and $22,000.
- The current recapture provision would be eliminated. Repayment would only be required if the home were sold within three years.
- The credit would be available at the time of closing, making it easier to be used as a downpayment.
The second component of the stimulus plan would provide home buyers with 30-year fixed-rate mortgages at 2.99% on contracts closed until June 30, 2009 and 3.99% on closings between June 30 and Dec. 31, 2009.
The coalition has also announced its support for continuing foreclosure prevention measures to keep people in their homes.
The housing stimulus, the coalition predicts, would stop the fall in home values and encourage prospective home buyers who have been sitting on the fence to return to the market, giving a boost to home sales and soon energizing the economy and creating new job opportunities.
Fix Housing First points out that 3 million home building-related jobs have been lost as a result of the slowdown in housing production, which represents $145 billion in lost wages and $4.9 billion in lost purchases. Deterioration in these jobs has now spilled over into virtually all sectors of the U.S. job market.
“Thousands (and soon to be millions) of jobs across all industries have been lost as a result of the housing crisis,” the coalition says. “Consumers have stopped purchasing, and small businesses are failing. Time is of the essence — single-day market changes can quickly wipe out the $700 billion economic recovery plan.”
To learn more about Fix Housing First, click here.