Home Builders Need One More Unifying Issue — Why Not Energy Efficient Home Loans?
Two years ago at this time of year, the new housing industry had a rallying, unifying issue, complete with its own misnomer slogan, “Fix Housing First.”
The theory went that if you stimulated the demand side of the home purchase equation, many good things would happen.
What took place during the months leading up to the February 2009 Congressional vote and enactment of the American Recovery and Reinvestment Act was a show of solidarity we’ve rarely seen at work across an industry sector–the tax credit for home buyers was in, and it would be extended and expanded in November to stay in force for contracts through less than two weeks ago.
Perhaps it was desperation that brought home builders and building materials suppliers of all sizes, shapes, and business models together behind the measure that aimed to stimulate home purchases, both to reduce the count of available homes on the market and to keep people in jobs who were building new homes.
Across two administrations and across sharp partisan differences, the initiative gained traction because it would help stanch the free-fall in home prices that was set in motion as the leverage underpinning homeownership came undone from all directions at one time.
Arguably, the stimulative tactic did what it was supposed to have done. Did it “fix” housing? No, of course it didn’t fix housing. There’s still too much on the debt side of every balance sheet you look at, and not enough coming in to pay for it all. To fix housing, you’ve got to fix jobs and household formations, which means fixing consumers’ capacity to spend money on goods and services, which means fixing debt and income, which leads back to jobs.
What the program did–especially for those who make and sell new homes–was to kick the can down the road. This sounds like a bad thing. But is it?
“Sometimes, kicking the can down the road is more than kicking the can down the road.” Joe Kernen, the CNBC Squawk Box co-anchor who would argue he’s the “real” morning Joe, said that today during his early morning program. “Sometimes it really gets something done.”
Meaning that bail-outs are not all bad if they provide time for markets to regain their legs and start working the way they should.
He was referring in this case to the European Union’s Trillion-Dollar bailout of its troubled economies in Greece, Portugal, Ireland, Italy, and Spain, which could be said to have averted a global liquidity lock-up the likes of which we’re only too familiar with in spite of our short memories.
The Euro bail-out reminds one and all of the reality of the era we’re stuck in for at least as long as it takes household balance sheets to draw back into their norms and for both private and public debt to reach equilibrium with the capacity to service it–the era of pain management.
Home builders–and remodelers–know all about pain management by now. After months of privatized profits, a ton of losses on the backs of the public, the price for fantasy-cheap capital, and the consequence of three or four years of 300,000 to 400,000 new homes a year beyond the market need.
Still, home builders and their partners need to seize on another common rallying point. What the tax credit stimulus did or didn’t do for the housing economy and the broader economy will only really be known from a future vantage point. What large and small companies who are in new-home construction need is a focal point to align and coordinate their efforts around.
And there is at least one: energy efficient mortgages. Or if you prefer another misnomer slogan: green mortgages. Plus, energy efficient appraisals.
What this could do, if home builders and their partners would seriously align behind the issue, would be to kick the can down the road in a good way.
It’s all about household check-book management. Instead of only looking at principal, interest, taxes, and insurance as the key building block of underwriting a mortgage and the ability to pay it back, energy efficient mortgages and appraisals would presume adding an “E” to the PITA, to factor in what people pay for utility costs.
Together with a pervasively accepted third-party energy efficiency ratings mechanism, homes with greater monthly utility bill efficiency would be worth a premium in appraisals, and would enable the borrower to carry a loan beyond what the current finance-ability ceiling would be.
This means a buyer could opt in at no penalty for greater levels of energy efficiency in their home, and pay off the cost of the often optional “energy package” of upgraded windows, heating and ventilation system, and hot water heater with credit that would cost the same as a less expensive home without the energy package.
This would be good for home builders, because it would give them an even greater edge over resales–and the foreclosure tsunami–in a market that will only gradually improve for several years to come.
So, home builders and their supplier partners should rally around this issue, even as the dozens of proposed energy bills gather and lose steam in the current legislative session. Once financial and immigration reform get checked off on the Obama Administration’s extraordinary agenda, energy and climate measures will get their turn in the spotlight.
We think it would be a worthwhile issue to push a unified call to action, because sooner or later, the financial ramifications of climate change and energy independence will be huge for the sector.
Consider it part of your pain management strategy for the next six to 12 months.
The Fix Housing First Job is Not Done Yet
When Raleigh, N.C.-based St. Lawrence Homes executive Rich Ohmann speaks, we know we have to listen.
Yesterday, it was what Rich made of the media’s take on housing starts, which portrays home builders collectively as a villainous drag on a fragile economic recovery. Here’s Ohmann’s reaction:
I love this story. It blames housing for dragging down the ‘budding economic recovery’. I would submit that the prior turns of homebuilding were fueled by the creation of new homebuilding firms (we were one of them in the mid 1980’s). Today’s languishing condition is only partly due to the condition of the market (no disputing the fact that things are awful in our economy as a whole). I would place the blame for a majority of the lack of vibrancy in homebuilding on the fact that innovators and new business creators aren’t able to secure ANY funding for a venture large or small. (emphasis added by Housing Crisis) A young entrepreneur can’t start up without cash and there’s no credit. The old world entrepreneurs are still trying to figure out what to do with what they were left with when the world came to a screeching halt.
There’s no recovery without a credit source to fuel it. Am I the idiot here or am I just one of many?
You are not alone, Rich.
As you know we’ve been on the road this week. Everywhere everyone in residential real estate–single-family, multi-family, affordable, etc.–wonders to us aloud, “What’s happening out there? What are you hearing?”
What we’re hearing is that there’s no consensus on what’s going on, as much as we crave a pattern, and want to see a trend develop. Where there are bright spots, they’re bright for isolated reasons. The theme and broader backdrop is still hugely challenging, save in part for the public home builders, whose almighty balance sheets will see them through another treacherous stretch of 12 months or more.
- We’re hearing cheery one-offs from home builders such as Irvine, CA-based MBK Homes, that they’re not only sold out on their planned homes through their current fiscal yearend, ending April 1, 2010, they’re also 50% sold out for their coming new year.
- We’re hearing this phrase repeatedly, and in more and more places: “We’re buying finished lots. We have to.”
- We’re hearing that public companies that were doing 1% of their market’s homes on volume of 1,400 homes a year, now have 4% marketshare doing less than a run-rate of 200 units a year. The publics can build; many privates can not given the cost of money to go vertical today.
- We’re hearing that as long as a company has access to ”internal finance,” they can build. If they don’t, they’re SOL, and ergo a “drag on the economy,” as the Associated Press story referenced above would contend.
- We’re hearing that company after company that succumbed to the credit squeeze of 2008 and 2009 has a principal or three who’re locking and loading to reenter the fray as Messrs. NewCo in 2010.
- We’re hearing rumblings that the FDIC has begun operating in similar ways to the Resolution Trust Corporation in the 1990s. When a bank goes into zombie mode, and can’t move on its real estate holdings because doing so would throw its entire capital structure into turmoil, the FDIC now comes in and takes the bank, and begins deploying the commercial real estate for 10 or 20 or 30 cents on the dollar, just like the RTC back in the day. The noteworthy thing is that the FDIC is trying to keep from letting the land go to speculators–rather, it’s trying to place the residential land portfolios with companies who earnestly want to make a longer term go of building communities out.
- We’re hearing that job loss, job loss, job loss is the issue policy and policy-makers need to give their full attention for the next year, or many of them won’t be in office after next year’s mid-term elections.
In Phoenix alone, points out Marcus & Millichap VP for Investments Peter TeKampe, 300,000 people have lost their job since the economic heyday that ended in 2007. In Atlanta, the number is 60,000. Apartment vacancy rates are on the rise. Household formations are stagnating. The structural drivers of the residential investment component of the GDP are challenged.
So, we’ve been wondering for months now, when home builders say, “I’m buying lots,” what’s on the other side of that equation? Are they buying lots to replace lots they’ve sold at full value? Is the scarcity in good finished lots in Phoenix, parts of Southern California, and even in Florida, Atlanta, and the D.C. metro area a scarcity caused by home buyer demand? Think again.
How can it be now, when other than a few exception veins of economic fortitude, earnings and well-being are so uncertain?
Among the biggest questions we face in our time, and we appear to be out of time to evade them, are these:
- How will Americans pay for healthcare?
- How will Americans both a) transition from dependence on non-domestic energy sources, and b) reduce its negative impact on climate and the environment?
- How will Americans segue into a new economy that can create demand for its workers?
Home builders–it is clear from a growing number of economists’ diatribes and media muckraking–are being held up as chicanery-prone, money-hungry beneficiaries of both the up and the down side of the economic parabola.
So, we have a thought, and it springs from what we feel was a highly effective unified effort among home builders in support of the extension/expansion of the home buyer tax credit and the telescoping backward of the NOL tax carry back provisions for larger companies.
We feel that in light of how successful companies were in harmonizing their interests and telling their stories to elected officials, home builders should sustain their momentum, and keep their act together.
The Fix Housing First brand, in other words, could take on a new mission. It could build off its collaborative outreach among home building, real estate, the AARP, and other organizations, to go another step or two to move the economy where it needs to go.
Fresh from the victories achieved on Capitol Hill, we’d suggest the following for Ken Gear and the organization that lobbied so well to sustain the stimulus of housing demand.
- Keep the consortium of builders together to Fix Housing First;
- Focus the educational and policy influence program on housing’s direct impact on jobs
- Get public home builders actively involved with the FDIC’s bank take-over programs to identify workforce housing districts in metro areas nationally
- Bring public and private home building companies together–using some percentage of the public home builders’ accrued cash supply as a guaranty–to capitalize acquisition of land parcels from FDIC banks, set up fee-building opportunities, with municipal workforce needs as a primary driver.
This would be a story that elected officials could both understand and act on.
We’re beginning to come to grips with the fact that the arduous, unbearably flat and grudging recovery ahead of us will continue to take a toll on what we knew as the home building landscape circa 2006. That world is done.
Home building companies need to account for how good and how trustworthy they have been and continue to be. That need goes 24/7. The minute one of them stops that, trust goes by the wayside, and a company is no longer a business.
Right now, home builders have an opportunity to seize on what they gained recently with Congress and the President, and continue the crusade to Fix Housing First, bringing their story to the public. This means staying together as a group, and putting resources and focus toward new economy solutions for one of our nation’s chronic problems–workforce housing.
If the big builders can become part of that solution–and they have the means in both capital and skills to do it–then it will go far toward easing Rich Ohmann’s, and many many others’, anxieties about getting blamed for being both the cause of the catastrophe, the beneficiary of the rescue, and the dampener of sparks of economic momentum.
Capitol Ideas
Bill Gloede, senior online editor for Big Builder, says it:
The government can not put a floor into stocks. It can not, obviously, control the global credit markets. It can not possibly create enough government jobs to make up for the losses in the private sector. But it can at least attempt to put a floor under housing, the single largest and most important investment to the vast swath of productive, taxpaying, investing America. Without them, there will be no economic recovery.
U.S. Senator Johnny Isakson (R-Ga.) last month introduced a bill that’s not too far removed from the original Fix Housing First proposal that would do just that with a $15,000 tax credit for all home buyers with no income restrictions. Had the Bush Administration taken this course last Spring, there is at least the possibility that the housing market would be stable now, with even toxic mortgage-backed securities trading at some known value.
While this Congress dithers this summer over global warming and health care and the empathy of the Supreme Court nominee, it should make the time to pass this bill.
Isakson Back with Home Buyer Tax Credit Bump
Senator Johnny Isakson hasn’t given up on an expanded tax credit for home buyers as a way to juice up economic recovery.
The Georgia Republican shepherded a similar initiative through Senate approval in February, only to meet an untimely demise in the stimulus reconciliation bill eventually signed into law in mid-February as the $787 billion American Recovery and Reinvestment Act of 2009 .
Well, now a measure looking eerily akin to a demand-stimulus plan proferred last fall by the Fix Housing First Coalition of organizations including builders, real estate agents and brokers, building material suppliers, home inspectors, and home owners associations is making its way through committee as S 1230. The long and short of it is that it would up the current $8,000 credit to a maximum of $15K, open the deal to all home buyers (not just first-time buyers with a ceiling on incomes), extend the deadline for another year, and maintain historically low mortgage interest rates for that same time period.
Here’s Isakson’s take on the measure.
Johnny Isakson, D-Ga.
“The first-time homebuyer tax credit has made a difference. First-time home buyers used it and the market stabilized, but we don’t have a recession in first-time home buyers. We have a recession in the move-up market,”Isakson said. “One of the biggest problems facing the American people today is an illiquid housing market, a decline in their equity, a decline in their net worth and a depression in the housing market that we are obligated to correct if we possibly can.”
Isakson has some pretty high voltage backing on this one. A group, formed in April, called the Business Roundtable Housing Working Group, consisting of the CEOs of $5 trillion worth of U.S. corporations with almost 10 million employees is wholly behind Isakson and a bi-partisan support group in Senate.
Here’s a link to the Business Roundtable.
Problem is the House of Representatives, where elected officials thought the Fix Housing First measure and its benefits smacked of a bailout for builders, the ones many voters thought caused the financial crisis in the first place.
One way or another, the Obama Administration and House chief Nancy Pelosi are going to have to get behind the plan for it to go anywhere.
Still, you got to hand it to Johnny Isakson to keep carrying the torch for a “housing-will-be-the-engine-of-recovery” plan. At a time broad economic signals seem to be short-circuiting and mixed, and the best hope now is for an anemic bounce back, a housing-led rebound sounds about as dreamy as anything.
Steeeeeeeee-Rike Three! Mortgage Buy-down In Doubt
Question one: can somebody hook us up here with those leaks coming out of the Administration’s team on what’s happening next in housing?
Question two: what’s a Fix Housing First Coalition to do if its last best hope for a compelling get-off-the-sidelines-and-buy program from the government goes by the boards?
It seems that although even a framework to address foreclosure mitigation and homeownership wealth destruction via house price declines is said to be more than a week from announcement, parts of what will and what won’t be part of the program are already decided.
What won’t apparently be in the comprehensive housing program Treasury Secretary Tim Geithner mentioned during his financial system rescue address on Tuesday is a humdinger mortgage-buy-down program aimed to spur sales.
Here’s Calculated Risk picking up on a Reuters report and adding a dash of CR-itude.
Housing policymakers weighed but have for now shelved one plan that would have seen the government stand behind low-cost mortgages of between 4 and 4.5 percent, sources said.
I need more details on the subsidies, but at least the dumb idea of buying down mortgage rates has apparently been shelved.
Before one dismisses the Obama initiative on mortgage re-terming out of hand, have a look at the orginally reported Reuters story on what’s afoot.
This is worth a healthy debate:
U.S. Treasury Secretary Timothy Geithner this week outlined a plan to take up to $1 trillion in bad assets off the banks’ books in the hope of restarting lending.
He also vowed the administration would spend $50 billion to combat foreclosures.
Geithner said on Thursday the administration would soon put a housing program in place that uses “a mix of incentive and persuasion” to get mortgage companies to rewrite loans.
“The key elements of the strategy are going to bring mortgage interest rates down to help avoid the foreclosures that we can reasonably expect to avoid,” he said.
Late mortgage payments and home foreclosures hit record highs last year. Foreclosure filings eased last month, but were still 18 percent higher than a year ago, industry research firm RealtyTrac said on Thursday.
Still in all, guess who’s taking credit for the the demise of Fix Housing First’s push for the $15,000 home buyer tax credit? Why the National Multi Housing Council, of course.
NMHC Chief Bibby
The NMHC, which pitched itself against the National Association of Home Builders in debate over the merits of home buyer tax credits, took an opportunity to pour salt in home builders’ wounds in its victory lap press statement regarding the new stimulus package.
NMHC actively worked with lawmakers as they negotiated the final compromise, urging them to remain focused on the critical needs for which this legislation was intended:
- to create jobs;
- to provide relief to the millions of Americans who are experiencing severe economic stress as a result of losing their job and are in need of affordable housing; and
- to address the foreclosure crisis.
We successfully argued against overly generous homeownership incentives, such as $15,000 homebuyer tax credit and federally subsidized 4 percent mortgages, as provisions that would do more harm than good and possibly re-inflate the housing bubble.
NMHC is in the process of analyzing the final legislation to update our side-by-side comparision chart with the apartment-related elements of the package. A partially updated version reflecting the tax title, which has been released, is available here.
In times like these, you know who your friends aren’t.
Absolutely Necessary Didn’t Include Fix Housing First
President Barack Obama’s signature sound bite in pitching the biggest government program since the New Deal is: Don’t make perfection the enemy of the absolutely necessary.
Gear Engaged
As details of a compromise $789.5 billion stimulus plan continue to emerge, it’s clear already that a Senate-backed plan to fund a jolt to home-buying demand with a 10%–up to $15,000–tax credit for home purchases over the next year did not survive the cut as “absolutely necessary.”
We talked early today with Kenneth Gear, who as executive director of the Fix Housing First coalition of companies led a concerted charge to make a shock-and-awe home-buying stimulus program part of the package that Congress would hand over to the President by next Monday. Gear, as you might expect, was crestfallen about the fact that the final bill “appears to have picked up the House language for a home buyer tax credit.” That means that first-time buyers of new or existing primary residences would be eligible for a $7,500 tax credit for a purchase through Sept. 1, 2009. Apparently, still under consideration is the possibility this amount might be elevated to $8,000.
Gear did not hide his disappointment. “First off, we’re hopeful that this bill [the one Congress has cobbled together] will stimulate the economy, but we have some doubts it will. It still doesn’t get to the root cause. The market’s still in a free-fall. It’s not going to stop the vicious circle of home price declines, because you’re not giving enough of an incentive to spur demand.”
Here’s what Wachovia Securities housing analyst Carl Reichardt says to sum up the impact of the scaled-down tax credit for home buyers.
Preliminary news also suggests that the Senate’s proposed $15,000 tax credit for all home buyers was not included in the Stimulus package. Instead, the House’s $7,500 tax credit for first-time home buyers was selected. The House version is essentially the same bill that was included in July’s stimulus plan (the Housing Economic and Recovery Act of 2008) except that it removes the requirement to pay the government back. While this is a marginal positive over the plan established before the Stimulus as it turns the credit into a gift versus a tax-free loan, we believe the Senate’s credit would have been much more impactful to unit demand given its size and its applicability to all home buyers, not just first-time buyers.
Gear says, “We’re not folding up our tent.” He points to generalized verbiage in U.S. Treasury Secretary Timothy Geithner’s remarks on Tuesday that address a “comprehensive program” to address the housing crisis. This would include foreclosure mitigation, and Gear hopes, a mortgage rate buy-down program for home buyers.
Not included in Fix Housing First’s agenda was a push to extend net operating loss tax provisions to allow companies to carry present losses back to prior-year profits to recover taxes paid. That push flopped as well.
Here’s Wachovia’s Reichardt on implications of the way the NOL tax carry back provision looks as it stands right now:
Both the original House and Senate bills included a net operating loss (NOL) carryback provision that would have allowed companies (other than those receiving TARP funds) to carryback their operating losses for 5 years in order to obtain potentially substantial tax returns. Preliminary news indications are that the NOL carryback was removed from the stimulus plan for large companies. Both bills originally included it and we have not observed meaningful public opposition to it until very recently. For HOV, KBH, LEN, CTX and MDC (for which the immediate benefit is minimal), the elimination of the NOL carryback is a negative, in our view. These companies would have been able to amend their 2008 tax returns immediately to request additional tax refunds. For DHI, RYL, PHM and MTH we believe it is also negative, but less so: these companies did not stand to gain immediately, but could have benefited at year-end 2009. For TOL and NVR the elimination of the NOL carryback is from our perspective a positive. The carryback would have provided additional cash to allow for the creation of home capacity at lower margins to continue to compete with these stronger players. TOL and NVR would not have benefited from the carryback extension as they have not generated significant taxable losses. For SPF and BZH the NOL carryback would not have been applicable because they had “ownership changes” which mitigated the ability monetize NOLs.
One doesn’t need to be entirely cynical to see partisan politics at work in the way these pro-home builder measures got squelched when the Senate’s plan met with the House’s.
Now, expectations soar as the nation looks to see what its elected officials mean by “absolutely necessary,” and what effect that will have.
And Ken Gear goes back to work this morning, not giving up his cause.
Wruh-Wroh, Fix Housing Credit May Go
Here’s the Wall Street Journal headline: Deal Near on Stimulus Plan.
Congress’s House and Senate are said to be close to reaching agreement on a scaled-down $790 billion Stimulus plan that the President has tentatively blessed.
But look:
Lawmakers are discussing trimming the cost of Senate-approved tax cuts intended to spur auto and home sales, but would preserve a $70 billion measure intended to shield millions of middle income Americans from the alternative minimum tax, a levy originally designed to hit the wealthy.
Looks like the Fix Housing First Coalition still has all their work cut out for them.
CR Weighs in on $15K Tax Credit for Home Buyers
Calculated Risk’s write-up on the plusses and minuses of the new Stimulus package’s intent to jolt home buying by providing a 10%–up to $15,000–tax credit on the purchase of a new or existing home within a year.
Legitimate questions in his concluding commentary:
By this measure sales are still above the normal range of about 6% per year. Inventory is above the usual range too. With 76 million owner occupied households, a normal range for existing homes sales is about 4.5 million per year.
The key problem for housing is prices are too high. How does this tax credit help reduce prices? Why are we trying to artificially increase the turnover rate? And why are we targeting a tax credit at higher income individuals?
This tax credit seems ill-conceived, and probably should be removed from the stimulus package. No one has adequately explained how this helps “fix housing first”.
Home builders and sellers have to be part of the solution to catalyze home sales. They have to lower prices to a sustainable–income and/or rental equivalent–level in order to reduce the real vacancies, new and existing inventory. People need to feel as if they’re going to miss out on a particularly smart opportunity if they don’t move to buy into the current market environment.
Traction for Fix Housing First–Update
Progress for the Fix Housing First cause!
The New York Times reports: Senate Approves Tax Break for Homebuyers.
The vote to add the tax credit, at a cost of about $18.5 billion, came as Senate leaders seemed to be finalizing their negotiations, with moderate lawmakers in both parties pushing to reduce the overall cost of the $900 billion stimulus measure and to focus it more tightly on provisions that will quickly spur spending and create jobs. The vote came as President Obama met with centrist lawmakers to address concerns about the package.
Need your thoughts on this immediately. [A billion here, a billion there, and pretty soon you're talking about real money... tap hit to the late Senator E. Dirkson.]
Gear-ed Up, Click for more
At the very least, kudos go to Fix Housing First Coalition executive director Ken Gear for working the Hill as effectively as he and his team have, even as lobbyists from every industry sector out there have lined up as supplicants for critical aid. This language is exactly the terms the Fix Housing First confab has sought:
The tax credit would give buyers 10 percent of the price of a primary residence bought within one year, up to $15,000, and is intended to stabilize plummeting home prices, which caused a wave of foreclosures and led to the near collapse of the financial system as Wall Street firms wrote down billions in mortgage-backed assets.
It’s still too early to say whether the measure will stick, especially as the Stimulus package undergoes reconciliation with an already-passed House legislation that currently excludes the home buyer tax credit. The AP notes:
Democrats readily agreed to the proposal, although it may be changed or even deleted as the stimulus measure makes its way through Congress over the next 10 days or so.
Calculated Risk supplies us this picture of what’s motivating Congress to lean toward the tax credit. Look particularly at the years 1974 and 1975 for illustration of the impact of a jolt to the economy enacted at that time.
Click on Calculated Risk's graph to access analyis.
One issue to consider immediately is will the measure have the effect its designers intend. Here’s comment from Calculated Risk.
New home sales increased from a 477 thousand SAAR in March 1975 to over 600 thousand SAAR later in the year. But that was from a depressed level as shown on the graph. The real boom in sales happened when the economy recovered – so I’m not sure of the actual impact of the 1975 tax credit.
Comment from the financial types who frequent CR’s blog pretty much capture the issues.
- Will a $15k spur any buying when job losses and fear of job losses keep their grip on consumer behavior?
- Won’t a $15k tax credit translate simply in to a higher price on a house, delaying the pricing correction toward sustainable affordability levels?
- Will a $15k tax credit for purchases in 2009 cause people to sell their homes purchased earlier at a loss–adding to downward pressure on home values in neighborhoods–to buy a home at today’s more favorable terms?
- What impact would this initiative have on vacancy rates, one of the key structural supply and demand issues that needs rebalancing for recovery to occur.
A story from Builder senior editor Pat Curry notes that the provisions of the $15k tax credit would not allow a home buyer to monetize the credit at closing.
“Emails were flying back and forth this morning, asking ‘Can it be used for closing?’” says Michelle Smallwood, vice president of sales for Melbourne, Fla.-based Holiday Builders.
Meanwhile the sphere of support for home buyer stimulants, at least among those whose livelihoods rely on new residential construction, has grown in volume and energy. ProSales editor Craig Webb reports that lumber and building materials dealers have increased their sabre-rattling as President Obama’s economic recovery package takes its final form.
Here’s a comment on Calculated Risk from “EvilHenryPaulson” that about sums up the sentiment:
You need to have an income for a tax credit to work
If someone has a data file with income, and house prices by region, I would import it into matlab and output a map of the expected % impact
$15,000 x top maginal federal income tax rate / house price = meh
not going to make a difference until the inventory is gone, the new price floor will just be a little higher
Talking the Walk
Is the Fix Housing First Coalition getting traction, as it asserts? Or is the mess that is Stimulus II such a mess that it’s hard to know which end is up.
The Washington Post today has this story about Senators who’re barking for alterations to the current $885 billion proposed recovery plan. The story includes this key quote:
A small but growing number of senators are upset that neither bill provides money to address the housing crisis. “We should first fix the real problem: housing,” said Sen. Lamar Alexander (R-Tenn.).
The Coalition put out a news release today that rolls up the sound bites of Senators who’re supposedly favorably disposed.
Washington, February 2, 2009 – The Fix Housing First Coalition today commended members of the U.S. Senate who are pushing for the inclusion of housing provisions in the stimulus package currently moving through Congress.
Over the weekend on several of the talking-head shows and elsewhere, several Senators stressed that immediate economic stimulus will only be achieved if the housing crisis is addressed. Comments included:
Mitch McConnell (R-KY): “We’re going to recommend, for example, you go right at the housing problem. We have a four-percent mortgage proposal where creditworthy homebuyers could buy down their mortgages or save them on the average fifty-six hundred dollars a year. Let’s fix housing first. That’s what started all of this.” (Face the Nation, CBS, February 1, 2009
Charles Schumer (D-NY): “I think we can do more for housing. One of the Republican proposals is to raise the seventy-five hundred tax credit we give to new homebuyers, raise it to up to fifteen thousand, do it for all homebuyers. That’s something that we look favorably upon. Getting mortgages down to four and a half percent as Senator McConnell mentioned. That’s a good idea.” (Face the Nation, CBS, February 1, 2009)
Jon Kyl (R-AZ): “So I think you have to start from scratch and reconstruct [the stimulus package] to start with the problem that created the entire cascade of events that have occurred here, the housing collapse.” (Fox News Sunday, Fox News Channel, February 1, 2009
John Ensign (R-NV): “Regardless of the jobs you are going to create you are not going to treat the cancer that is affecting our economy, and that is the housing problem. And that’s why we have put together a plan to solve the housing problem in the United States. And if you don’t do that, whatever short term jobs you’re going to put in with this stimulus bill, it’s really a spending bill, are not going to help bring us out.”
Kent Conrad (D-ND): “Are we doing enough to help the financial sector? Are we doing enough about housing? Because if we don’t get those two right, we’re not going to see the kind of lift out of this downturn that we need.” (State of the Union with John King, CNN, February 1, 2009
John Kerry (D-MA): “Housing has to be a component of this… Just this package will not fix this if we don’t also do something about housing…” (Meet the Press, NBC, February 1, 2009)
Then again, the Senate has a long way to go to determine what ultimately will be in the bill. Then it has to jive with what the House has already approved.