Gets Involved in Fix Housing First
The National Association of Homes Builders (NAHB) says it has an
answer concerning how to start correcting the mess that is the housing
Speaking to reporters on December 17, Jerry Howard, NAHB president
and CEO spared no words when he summed up the current state of the
"If any of you have doubts about how bad the market is the
data released this week tells the story," says Howard. "The
housing market index remains at an all-time low. Housing permits
are at the lowest levels ever recorded-the lowest since World War
II as determined by our analysts. Then couple that with foreclosures
and shattered consumer confidence
. all of this is not only
contributing but is in our view the root cause of the recession."
Phil Hoffman of Hoffman Custom Built Homes in La Place, La., and
Patrick Abercrombie, of Lowe's Cabinet and Lighting Gallery in Cleveland,
Tenn., also spoke to the media to reiterate how this is in fact
affecting all aspects of the building industry.
Hoffman, a third-generation builder, who once had six employees,
including his son, who he had to tell to go get another job, said
the phones stopped ringing in the middle of 2006, which had a huge
effect on his business.
"We've gone through all of our family savings in the last
20 months," says Hoffman. "Now it's just my wife and I.
I haven't touched my retirement but I don't look at my statements
as the last time I looked they were down 40 percent."
"Building a house takes 80-100 people," he says. "We
just affect so many people."
To fix this problem, the NAHB is spearheading Fix Housing First,
one of the largest coalitions of housing advocates ever assembled
in the United States, to push for a housing recovery plan that will
revive the economy.
"If we are going to successfully pull our nation out of recession,
we must address housing first," says Howard.
Fix Housing First consists of more than 600 organizations, home
building companies and manufacturers pressing for a major stimulus
package to stem the decline in home values, stabilize financial
markets and reignite consumer demand. To get the economy moving
again, the coalition is urging Congress to support enhancements
to the home buyer tax credit and provide below-market 30-year fixed-rate
mortgages for home purchases.
"If Congress enacts a meaningful tax credit, coupled with
an aggressive interest rate buy-down program, we are confident that
these measures will help to stabilize home prices, prevent future
foreclosures, restore consumer confidence and start creating jobs,"
The housing stimulus proponents are calling for significant enhancements
to the current $7,500 tax credit for first-time home buyers which
Howard says had virtually no impact. Among the improvements:
- All primary home purchases between April 9, 2008, and December
31, 2009, would be eligible;
- The credit amount would be increased to 10 percent of the price
of the home, capped at 3.5 percent 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 was sold within three years;
- The credit would be available at the time of closing, making
it easier to be used as a down payment.
The second component of the stimulus plan would provide qualified
home buyers with 30-year fixed-rate mortgages at 2.99 percent on
contracts closed until June 30, 2009, and 3.99 percent on closings
between June 30 and December 31, 2009.
The American Architectural Manufacturers Association (AAMA) is
one group that has joined the coalition.
"A majority of AAMA members have been adversely impacted by
the dismal drop-off in both new construction and remodeling activity
during the past two years," says Rich Walker, AAMA president
and CEO. "As the mortgage meltdown runs its course, a stimulus
package is sorely needed to jumpstart both residential and commercial
But both Walker and Howard are quick to point out that this is
a stimulus package and not a bailout.
"Once the industry is back on its feet and lenders are utilizing
valid lending criteria, a full and rapid recovery is expected,"
"With all due respect, bailing out the auto makers is only
a small part," says Howard. "If you put housing back in,
you'll stimulate those who sell carpets, televisions, etc."
"If adopted, the Fix Housing First stimulus recommendations
provide the catalyst to start the flow of money to builders and
consumers. As the housing demand recovers, the attendant jump in
new home starts will trickle down to the building products suppliers
in a hurry. It will take some time to work through the idle and
unfinished housing stock, but the short-term Fix Housing First incentives
are aimed squarely at boosting both new and existing home sales,"
Howard points out that Congress should be looking at stimulating
housing as "In a healthy economy, housing makes us the largest
component of gross domestic product. So it makes sense that you
would start with housing."
When one reporter asked if builders contributed to this oversupply
Howard said, "Builders are doing the right thing and not building
more to contribute to oversupply. That oversupply is due to foreclosures
so that has to be addressed."
And Howard says that taking such action will have an immediate
"If this were put into place home prices would stabilize almost
overnight and fewer people would be thrown into foreclosures."
The NAHB is encouraging the new Congress and President-Elect Obama
to take a hard look at this plan. "You may see something signed
into law as soon as inauguration day," says Howard.
Opponents of the proposals have said that putting this into place
would create another housing bubble. "We are in favor of tightening
underwriting standards," says Howard. "If you do that
you won't see the housing bubble that we saw in 2005-06."
In fact he says not building, which is happening now, can create
a new set of problems.
"If we're not building then in a few years we'll need homes
and builders will build again then raise prices and we'll be right
back where we are now."
Although Howard says, if passed, the plan will have an immediate
effect, he says it would take 4-6 months to work through the housing
inventory. "But it would create 600,000 jobs in the first year,"
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