Congress Considers “Fix Housing First” Tax Credit
In an effort to stabilize the housing market, Georgia Senator Johnny Isakson introduced S. 253, which seeks to expand the homebuyer tax credit passed by Congress last year. Instead of offering a tax credit only for first time home buyers that must be repaid over a 15-year period, the expanded proposal includes tax credits for all purchasers that do not need to be repaid unless the home is sold within three years. Included in the proposal are the following:
- Extending the eligibility period for the credit to December 31, 2009.
- Increasing the credit amount to 10 percent of the home price capped at 3.5 percent of FHA loan limits.
- “Monetizing” the credit so it is available at time of closing
- Allowing the credit to be used in conjunction with mortgages financed by state or local bonds.
The National Association of Home Builders, along with hundreds of businesses and organizations, stands firmly behind adding the Fix Housing First provisions to the anticipated economic recovery package. An economic study espoused by the Fix Housing First coalition projects that, over a four year period, results of a housing stimulus will include an annual 1% GDP increase, the creation of 940,000 jobs, and an increase in average homeowner equity by $25,000, resulting in state and federal revenues that will exceed the cost of the program.
The housing industry has ground to a halt after the subprime mortgage fiasco and the resulting foreclosures left many markets flooded with new construction. Home values fell and credit dried up. The way to fix the problem, according to Senator Isakson, is to offer a non-repayable tax credit to home buyers, a measure that worked when a similar housing crisis left a three year supply of vacant homes in the mid 1979s.
Of couse we would like to see green building incentives added to a housing stimulus package, perhaps something involving energy efficiency guidelines or the new tax breaks for wind and solar, but green building can only continue to grow in a strong housing market.
*oops, how=house.