Business Roundtable Submits Recommendations to Help Revive the Housing Market
Richard A. Smith, president and CEO of Realogy, is the chair of the Business Roundtable's Housing Working Group, which recently submitted the following recommendations to the White House and Congress to stimulate the U.S. housing market:
Keep mortgage interest rates at historically low levels (below 5%) for at least one year;
Expand the current First-Time Homebuyer Tax Credit incentive from the lesser of 10% of the purchase price of the home or $8,000 to a higher limit of either 10% or $15,000 for all homebuyers, remove the income restrictions and include all primary residence purchases for one full year;
Conduct a thorough review of current foreclosure mitigation and loan-modification programs in light of rising loan-modification re-default rates;
Make permanent the current temporary conforming loan limits; and
Continue to review and strengthen government efforts already underway to review and refine mortgage lending practices.
Housing Industry Associations Endorse Business Roundtable Proposal
"The National Association of Realtors (NAR) and our 1.2 million members applaud the Business Roundtable for its sound policy recommendations put forth to reinvigorate our nation's housing market. The proposal they announced today is consistent with the recommendations NAR has advocated and reflects the critical need to continue efforts to bring stability to the housing market."
-- Charles McMillan, president, National Association of Realtors, "Realtors Join Business Roundtable in Calling for Renewed Focus on Housing Stabilization," Yahoo Finance, June 10, 2009.
"The National Association of Home Builders (NAHB) supports the Business Roundtable's efforts to promote policies that will stimulate housing demand. NAHB looks forward to working with all interested parties in the business community, on Capitol Hill and in the Obama Administration to foster new ideas and policies that will help to get housing and the economy back on track, particularly at a time when the recovery is facing a number of significant challenges."
-- Joe Robson, NAHB chairman, "Statement from NAHB Chairman Joe Robson on Enhancing the Home Buyer Tax Credit," Yahoo Finance, June 11, 2009.
"Stimulating the housing market is one of the best ways Congress can help accelerate the recovery of our national economy. Offering $15,000 to potential homebuyers is a powerful incentive that I believe will jumpstart the housing market. The current $8,000 credit for first-time buyers has had a positive effect on the housing market this year. Increasing the amount and expanding the benefit to include all homebuyers will have an even larger impact in spurring the housing market and stabilizing the economy."
-- David G. Kittle, CMB, Chairman of the Mortgage Bankers Association, "MBA Supports Proposal for $15,000 Tax Credit for All Home Buyers," RISMedia, June 12, 2009.
Bill to Increase Homebuyer Tax Credit Introduced to Senate
Drawing on more than three decades of experience in the real estate industry, U.S. Senator Johnny Isakson, (R-Ga.), introduced legislation to invigorate housing demand and to boost the economy by expanding the first-time homebuyer tax credit passed by Congress earlier this year. Specifically, Isakson's legislation would:
Increase the maximum amount of the credit from $8,000 to $15,000 and expand the current tax credit so that it applies to any buyer of any home, not just first-time buyers
Eliminate the income caps of $75,000 for an individual and $150,000 for a couple under the current tax credit so that there is no income limit for eligibility
Extend the tax credit for one year from date of enactment and would still allow homebuyers to claim the credit on their 2009 tax return for purchases made in 2010.
-- "Isakson Continues Push to Stimulate Housing Market," The Daily Citizen (Ga.), June 10, 2009.
Bill to Spur Home Sales Introduced to House of Representatives
Saying that it was critical to spur home sales because of their impact on our nation's economy, U.S. Rep. Howard Coble (R-NC) announced that he has introduced legislation to:
Extend the [homebuyer] tax credit through January 1, 2011 (currently, the credit only applies to purchases made between April 8, 2008 and December 1, 2009)
Repeal of the limitation based on modified gross income (currently, the credit would "phase out" for singles making more than $75,000 and couples making more than $150,000); income limitations aren't necessary if the credit is capped at $8,000
Extend waiver of the recapture provision. Under current law, the tax credit for purchases made in 2009 does not have to be paid back unless the homeowner sells or ceases to use the property as a principal residence within 36 months of purchase. Extending this waiver ensures that the credit isn't treated as an interest-free loan, but still requires responsible homeownership
-- "Coble Introduces Bill to Spur Home Sales," The Daily Citizen (Ga.), June 10, 2009.
Chief Economist at Moody's Economy.com: "Expand the Housing Tax Credit"
"Based on simulations of the Moody's Economy.com macro model, the expanded tax credit, if extended through the end of 2010, would increase 2010 sales by almost 600,000. This in turn would generate $33 billion in additional real GDP, lifting growth in 2010 by about 25 basis points. That would translate into $56,000 in real GDP generated for each additional home sale. Benefits would flow to a range of hard-pressed industries, including mortgage lenders, real estate firms, insurance companies, property maintenance and repair businesses, and building supply retailers."
-- Mark Zandi, chief economist, Moody's Economy.com, "Expand the Housing Tax Credit," Moody's Economy.com, June 16, 2009.