Fix Housing First to Solve This Financial Mess
We
need change now. The flooring industry is in a rut – a big rut. Sound familiar?
The change we need can only be fulfilled with a united flooring industry
sharing one vision: A Vibrant Housing Market.
This is not about whether the recently passed Stimulus Package will put people back to work, but one that the flooring industry and other industries, including building and construction trades like plumbing, roofing, electrical, etc., need today.
“If we are going to successfully pull our nation out of recession, we must address housing first,” said NAHB President and CEO Jerry Howard. This is said so eloquently when one considers stimulus money was allocated to road construction and other large, long-term projects that will take time to bid, plan, design and complete.
I believe that through support of the Fix Housing First coalition, business for the flooring industry would be stimulated. Fix Housing First, which consists of more than 600 organizations, home building companies and manufacturers, is 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 homebuyer 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,” Howard added.
According to the coalition, a similar plan worked in 1975, when the nation was also in the midst of a recession. Congress passed a short-term $2,000 tax credit for all new homes ($12,000 adjusted for today’s median home prices) along with subsidized mortgage rates. The stimulus jump-started the depressed economy and the effects continued long after the measure expired.
Conversely, the recently enacted Stimulus Package only extends homebuyer tax credits to first-time buyers. This should be considered only a first step, because a tax credit available to all home buyers would get home buying and selling activity moving at all price points.
Among the improvements the coalition seeks to address: eligibility for all primary home purchases between April 9, 2008 and Dec. 31, 2009; increasing the credit amount to 10 percent of the purchase price, capped at 3.5 percent of FHA loan limits, and bringing the credit to between $10,000 and $22,000.
The current recapture provision would be eliminated. Repayment would only be required if the home were sold within three years. And 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 homebuyers 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 Dec. 31, 2009.
Federal Reserve Chairman Ben Bernanke announced in mid-March the intention of the central bank to purchase as much as $300 billion in long-term government bonds, a move designed specifically to lower interest rates and encourage banks to lend again.
The Fed purchases should boost Treasury prices and drive down their rates. That would ripple through and lower rates on other kinds of debt.
The coalition has also announced its support for foreclosure prevention measures to keep people in their homes. To help buyers in California and other high-cost markets, NAHB is also calling on Congress to permanently keep the FHA/Fannie Mae and Freddie Mac conforming loan limits at $729,750.
Many flooring industry companies have joined the effort to Fix Housing First, including: Shaw Industries, Mohawk, Dal Tile, Congoleum, Columbia Flooring, the World Floor Covering Association, the Carpet and Rug Institute, American Olean Tile, Mountain Lumber, National Gypsum, North American Association of Floor Covering Distributors, Parex Lahabra, The Dixie Group, Unilin Flooring and others. It is now time for the entire industry to stand united for our mutual benefit.
This is not about whether the recently passed Stimulus Package will put people back to work, but one that the flooring industry and other industries, including building and construction trades like plumbing, roofing, electrical, etc., need today.
“If we are going to successfully pull our nation out of recession, we must address housing first,” said NAHB President and CEO Jerry Howard. This is said so eloquently when one considers stimulus money was allocated to road construction and other large, long-term projects that will take time to bid, plan, design and complete.
I believe that through support of the Fix Housing First coalition, business for the flooring industry would be stimulated. Fix Housing First, which consists of more than 600 organizations, home building companies and manufacturers, is 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 homebuyer 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,” Howard added.
According to the coalition, a similar plan worked in 1975, when the nation was also in the midst of a recession. Congress passed a short-term $2,000 tax credit for all new homes ($12,000 adjusted for today’s median home prices) along with subsidized mortgage rates. The stimulus jump-started the depressed economy and the effects continued long after the measure expired.
Conversely, the recently enacted Stimulus Package only extends homebuyer tax credits to first-time buyers. This should be considered only a first step, because a tax credit available to all home buyers would get home buying and selling activity moving at all price points.
Among the improvements the coalition seeks to address: eligibility for all primary home purchases between April 9, 2008 and Dec. 31, 2009; increasing the credit amount to 10 percent of the purchase price, capped at 3.5 percent of FHA loan limits, and bringing the credit to between $10,000 and $22,000.
The current recapture provision would be eliminated. Repayment would only be required if the home were sold within three years. And 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 homebuyers 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 Dec. 31, 2009.
Federal Reserve Chairman Ben Bernanke announced in mid-March the intention of the central bank to purchase as much as $300 billion in long-term government bonds, a move designed specifically to lower interest rates and encourage banks to lend again.
The Fed purchases should boost Treasury prices and drive down their rates. That would ripple through and lower rates on other kinds of debt.
The coalition has also announced its support for foreclosure prevention measures to keep people in their homes. To help buyers in California and other high-cost markets, NAHB is also calling on Congress to permanently keep the FHA/Fannie Mae and Freddie Mac conforming loan limits at $729,750.
Many flooring industry companies have joined the effort to Fix Housing First, including: Shaw Industries, Mohawk, Dal Tile, Congoleum, Columbia Flooring, the World Floor Covering Association, the Carpet and Rug Institute, American Olean Tile, Mountain Lumber, National Gypsum, North American Association of Floor Covering Distributors, Parex Lahabra, The Dixie Group, Unilin Flooring and others. It is now time for the entire industry to stand united for our mutual benefit.
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