New Home Building Industry Coalition Asks for Bailout
Watching one industry after another cue up for federal bailouts finally triggered a response from America's largest home builders, and from the NAHB, which in November pulled together “Fix Housing First,“ a coalition of more than 600 housing industry-related companies and organizations, to lobby for government help. The first week of January, 150 members will attempt to persuade more than 90 members of Congress directly on Capitol Hill.
“It started with conversations among the largest builders, members of NAHB's High Production Home Builders Council,” says Ken Gear, Pulte Homes' vice president of government affairs, now the acting executive director of the Fix Housing First. “We discussed how Congress is bailing out banks and other industries, but not addressing the real problem. What needs to get fixed, before anything else will get better, is housing.”
Gear says high production council members discovered that similar conversations were taking place among NAHB officers. “The issues are the same for builders of every size,” he says, “so NAHB took the lead in organizing the coalition, and the largest builders are taking a very active role in promoting and raising funds, and selling the idea to manufacturers and all the related industries that depend on housing.”
The coalition is asking Congress for enhancements to the $7,500 home buyer tax credit enacted last summer (which they say has not worked at all) and subsidies to provide below-market, 30-year fixed-rate mortgages to spur home purchases. The coalition cites a similar plan that it says worked in 1975, when Congress passed a short-term $2,000 tax credit along with subsidized mortgage rates.
“Our proposal calls for tax credits averaging about $15,000,” Gear says, “but it's different in various areas, according to what average housing costs are. It's based on the Fannie Mae/Freddie Mac loan limits, and ranges from $10,000 to $22,000.” Fix Housing First also wants a 2.99 percent rate on 30-year, fixed-rate mortgages originated in the first six months of 2009, then 3.99 percent for the rest of the year.
Fix Housing First already faces opposition from some economists, who say building more houses would be a mistake, with the huge inventory of unsold homes still on the market. The debate seems to hinge on how much further home prices have to drop to align with historical norms.
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