By PAUL JACKSON
November 14, 2008
As the National Association of Home Builders pushes to expand a first-time homebuyer tax credit from $7,000 to $22,000 in the name of stimulating home buying activity, two groups representing the multifamily rental housing industry slammed the idea — along with other taxpayer-funded efforts to prop up housing demand — as industry favoritism, and called on Congress to shelve the proposals.
In a letter sent to legislators, National Multi Housing Council president Doug Bibby called tax credits, seller-financed downpayments and interest rate buydowns “bailouts for the for-sale housing market, the very sector of our economy that helped trigger the global economic crisis.” The letter was sent on behalf of the NMHC and the National Apartment Association.
Homebuyer tax credits were originally touted as “critical” to housing’s rebound by both realtors and home builders, but so far the results clearly have been less than flat. Realtors suggested to MarketWatch’s Amy Hoak earlier this week that buyers aren’t biting, because the credit isn’t free money and must be repaid.
“The only issue a homebuyer tax credit addresses is the oversupply of single-family houses, which is something best left to the marketplace — not taxpayers — to correct,” Bibby said.
“Oversupply situations happen in every industry, and the housing industry will recover with or without Congressional action, just as it has in past oversupply situations. Moreover, why should taxpayers help out an industry that recognized a downturn was coming and still kept overproducing?”
The Commerce Dept. said at the end of Oct. that the supply of new homes on the market represented 10.4 months of sales in Sept., well above historical norms (although improved from one month prior). Builders have been struggling with a huge inventory overhang throughout the ongoing housing crisis, with critics saying many builders failed to adjust quickly enough to the bust of the housing bubble.
“Why would the government want to use taxpayer dollars to encourage people to buy an asset that is expected to lose up to 25 percent of its value in the next 12 to 24 months?” Bibby asked. He argued that such incentives do little to create jobs, and merely put borrowers in the situation of being upside down on their new home; instead, he argued that builders need to take their medicine and absorb those losses directly.
Bibby suggested more traditional economic stimulus measures, rather than bailout attempts.
“If Congress wants to shore up the economy, it should stop favoring specific industries and instead enact proven economic stimulus policies, such as investment incentives for business, investing in our national infrastructure, extending unemployment benefits, issuing general aid to state governments and meaningful energy efficiency tax incentives for commercial real estate.”
Write to Paul Jackson at paul.jackson@housingwire.com.
source: housingwire.com
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Rental Housing Leaders Slam Homebuyer Tax Credits
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