NAHB President Says Housing Legislation Can Help Turn Around Economy, Housing Market

By Keat Foong, Executive Editor Washington, D.C.— National Association of Home Builders (NAHB) President Sandy Dunn praised the Housing and Economic Recovery Act of 2008 that was signed into law on July 30. “We believe this landmark legislation is vital to address the turmoil in the financial and housing markets and to bolster the faltering economy,” said Dunn, in a teleconference with reporters. Presenters of NAHB’s teleconference included Rob Dietz, director, tax issues with NAHB; Ed Brady, president of Brady Homes, Bloomington, Ill.; and Richard Dugas, president and CEO of Pulte Homes. Provisions of the housing law includes: • a $7,500 temporary first-time homebuyer tax credit to stimulate homebuying and bring down excess inventory across the country; • a $300 billion plan to help refinance the loans of as many as 400,000 homebuyers using government-insured financing; • authority to the Treasury to shore up Fannie Mae and Freddie Mac if necessary, and the creation of an independent regulator to oversee the GSEs;• a permanent national rental housing trust fund benefiting mostly very-low- to low- income households; • emergency neighborhood stabilization funding for the bulk purchase and rehabilitation of foreclosed homes in targeted areas.  Dunn singled out the $7,500 tax credit for first-time homebuyers as a centerpiece of the legislation. She noted that 40 percent of all homebuyers are first-time buyers, and said the tax credit (which has to be repaid by the homebuyer, but is interest free) will help fight the falling home prices that are threatening the economy. Dunn said that Congress enacted a similar tax credit, of $2,000, in 1975 for homebuyers. In nine months, she said, “buyers flocked to the market.” That tax credit helped clear the then-record number of unsold inventory and it was an “important tool” to help “dig” the economy out of the recession at that time. “In short, the tax credit worked before and we expect similar success in the year ahead,” said Dunn. It was also pointed out during the teleconference that the increased demand from first-time homebuyers that is generated would free up those who are not first time homebuyers to sell their homes and purchase homes in other parts of the country. Dugan said Pulte Homes plans to match the credit and offer some form of incentive of at least $7,500 to buyers who purchase homes from the company. And Brady noted that measures contained in the legislation to prevent foreclosures will result in fewer homes returning to the market and will help lower inventory. The law “will help improve the market and create an atmosphere of optimism,” he said.