'Fix Housing First' Could Spur Recovery

The goal is to press for legislative action to provide short-term, targeted incentives that will encourage consumers to buy homes again.

As the key ingredients of a housing recovery plan, the Fix Housing First coalition is urging Congress to support enhancements to the current $7,500 homebuyer tax credit and to provide below-market 30-year fixed-rate mortgages for home purchases.

It’s been done before, and it worked. In 1975, Congress passed a short-term $2,000 tax credit for all new homes—that’s equivalent to $12,000 adjusted for today’s median home prices—and subsidized mortgage interest rates. The stimulus jump-started the economy and the effects continued long after the measure expired.

Fix Housing Now proponents want to increase the tax credit to 10 percent of the price of the home, up to 3.5 percent of FHA loan limits, and to eliminate the requirement that the credit be paid back unless the home sells within three years.

The second component of the stimulus plan would provide 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 December 31, 2009.

Fix Housing First points out that 3 million home building-related jobs have been lost as a result of the slowdown in housing production, which represents $145 billion in lost wages and $4.9 billion in lost purchases.

So time is of the essence. Still, will any of these proposals see the light of day? More than likely, the new administration will take quick action and push some sort of housing stimulus program through—and they’ll do so quickly.

MIMI BRIEGEL
Publisher
mimib@florida-homebuyer.com