Missing: Stimulus for housing market

Tue, 02/03/2009 - 4:10pm
By: Letters to the ...

There is one important element missing from the landmark economic stimulus package now being assembled on Capitol Hill.

Little attention has been given to solving the devastating impact of the housing downturn, which is the root cause of the financial crisis that continues to escalate at an alarming rate.

Over the past couple of years, more than 3 million jobs in construction and related fields have been lost, $3.5 trillion of home equity has evaporated, and home sales and production have plunged to record lows.

The collapse of the housing market eventually resulted in the financial meltdown and credit crunch we saw last fall and now has spilled over into the general economy with devastating results.

Congress must fix the underlying problem in order to put the economy back on the path to growth and prosperity.

At the same time as our lawmakers work to reduce mortgage foreclosures, they must provide incentives that will bring home buyers back into the marketplace.

Providing a home-buyer tax credit that could be applied toward a down payment would do the job.

Based on local housing prices, the credit would range significantly higher than the $7,500 currently available for first-time purchases; it would go to all home buyers, with income limitations; and it would not need to be repaid.

The credit would be available only until the end of this year, sending a strong signal to families who have been sitting on the fence that they need to act quickly to take advantage of this opportunity.

America’s consumers and lenders won’t regain the confidence our economy so desperately needs until they see an end to the downward spiral in housing values. As history shows, housing is the sector that leads the economy out of recession.

Congress must make meaningful provisions in the stimulus legislation that will enable housing to return to that role as quickly as possible.

Dan Petry

Trademark Builders

President, Homebuilders Association of Midwest Georgia

Fayetteville, Ga.

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Submitted by dollaradayandno... on Fri, 02/06/2009 - 8:08am.

The first 750,000,000 stimulus to the banks was to finance houses! The banks kept it!

The Current nearly one trillion, is NOT for housing, it is for what it says it is---get a lot of projects started all over the USA. And of course more bank money.

There is another trillion or more to follow soon for housing.
Both parties know this, but the republicans want to argue over 10%
of the current bill in order to keep the home fires burning. VOTES.

We ain't gonna build many more houses soon. There is a two year supply, foreclosed or for sale.
Same with the Shopping centers.

What the new bill will say is if you have a certain equity in your home and can't continue the payments, then they will refinance it for you at a much lower interest rate over a longer period of time. Even balloon loans will be available. Will stop foreclosures on some homes but not the majority.

Those people who have upside down loans are going to be foreclosed and our tax money will again as before, make the banks whole!

We get worthless stock for our loan to the banks!

Hopefully there will be an even further bill to start JOBS for those lower and middle income people.
We will build roads, dams, parks, go to trade schools, start farming co-ops, clean up peanut butter factories, etc.

All this will take years.
We will have a depression.

Robert W. Morgan's picture
Submitted by Robert W. Morgan on Fri, 02/06/2009 - 6:47am.

A $15,000 tax credit for homebuyers for the next year. Now who will that help?
The homebuyers - sure. They buy a house, save some money have some extra cash get a big screen TV.
Well actually only those homeowners who don't have a house to sell, since they can't sell now because of all the competition from foreclosures.
So maybe first time homeowners - although the credit is capped at 10% of the purchase price so a $100,000 house would only get a $10,000 credit.

Then the biggie. Which houses are going to sell first? The foreclosures of course and you can bet your last dollar the banks won't be giving builders any money for construction loans while they have foreclosed homes to sell.

So the banks with foreclosures win.

If they really wanted to help both homeowners and the housing industry they would figure out a way to prevent foreclosures. There were 9,000 in Atlanta last month and that is in an environment when there are less than 3,000 sales. The math doesn't work.

There is also the law of unintended consequences at work here as well. Possible buyers will now delay their purchase in order to get the tax credit. Buyers under contract may delay their closing or back out and delay their purchase to get the tax credit. Think anyone in the Senate thought of that?

Submitted by PTC Avenger on Thu, 02/05/2009 - 11:36pm.

Ah yes, "The Please For the Love of God Buy a House Stimulus."

And yes, I think that'd do the trick. The Great Housing Crash will probably end IF something along this line passes. House prices won't shoot to the moon, but the inventory will start getting bought up, prices will stabilize, the banks can count up their losses, and things will start to settle down.

You can argue all you want, but up to 30-50% off already, positive cash flows, plus another 10% or so from the government, the rush to physical assets to insure against future inflation and dollar destruction, and all of a sudden, homes in many markets will look like decent investments again. For anyone who has any money left to buy a home, that is.

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