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Tax Credits Helping Housing Regain Its Footing, Robson Says
Participating in a June 2 business roundtable hosted by Vice President Joe Biden to promote the benefits of the economic stimulus package enacted into law earlier this year, NAHB Chairman Joe Robson said that the $8,000 first-time home buyer tax credit has helped to arrest a slide in housing sales, but much more needs to be done to get back to anything resembling a healthy housing market.
The event, which took place at Pace University’s Lubin School of Business in New York, also featured New York Governor David Paterson, Deputy Secretary of the Treasury Neal Wolin and other business leaders from across the country.
“The Recovery Act is putting people to work, and our business leaders here today are a testament to that. They are on the front lines of hiring folks for new jobs and preventing layoffs. They have first-hand knowledge of how this economy — and our policies — are working,” said Biden. “We’re looking to those in the business community to be creative, to be innovative and really take advantage of the new opportunities made possible by this Recovery Act.”
Providing a snapshot of the state of the housing sector, Robson reported that recent economic indicators show signs that the housing market is at or near bottom.
“Builder and consumer confidence is on the rise, new and existing home sales have stabilized, unsold new home inventories continue to fall, and housing affordability is at record highs due to historically low mortgage rates and low house prices,” he said.
“We could be bumping along at this level for a few months — we still have a ways to go to get the supply-demand equation in balance and builders continue to face serious problems in obtaining financing for the production of housing,” Robson added.
Robson said that the recent decision to permit home buyers to monetize the first-time home buyer tax credit to help cover the closing costs on an FHA-insured home “will result in tens of thousands of additional new and existing home sales.” (For related stories in this issue of NBN, click here and click here.)
“Overall, we believe the home buyer tax credit will stimulate nearly 200,000 additional home sales across the nation this year,” including more than 70,000 sales to existing home owners who will be able to buy another home after a first-time buyer purchased their home.
“This is an important point,” Robson said. “The tax credit will provide a ripple effect, enabling move-up buyers to advance up the rung of the housing ladder. This will spur overall home sales and help to stabilize the housing market.”
The tax credit stimulus is expected to produce 73,000 jobs in 2009, Robson said, but much more needs to be done to get the housing sector back on a solid footing. “Keep in mind,” he said, “we have lost three million jobs in housing and housing-related industries since the peak of the market in 2005.”
Biden said that the economic stimulus package also includes numerous tax credits that are helping to drive new product demand — including more than a dozen energy efficiency and renewable energy tax credits that are creating new opportunities for companies.
Robson said that two tax credits in the stimulus package related to remodeling will help put people back to work and make the country more energy-efficient:
- The Existing Home Retrofit Tax Credit will enable consumers to save up to $1,500 for installing energy-efficient windows, doors, roofing, insulation, water heaters and heating and air-conditioning systems through the end of 2010.
- The Wind, Solar, Geothermal and Fuel Cell Tax Credit also provides incentives up to 30% of the cost of each product for the installation of geothermal heat pumps, solar panels and small wind energy systems. The tax credit applies to existing homes and new construction and is good through 2016.
NAHB estimates that the expansion of these tax credits will increase remodeling activity by at least $3 billion in 2009 and 2010. (For a related story, click here.)
“These tax credit programs are not only important to the remodeling industry, but will also create new green jobs and spur the necessary investment in research and development that will help make our nation more energy secure,” said Robson.
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