Thanks to the tireless and monumental efforts of the NAHB federation, the most important housing legislation in a generation is now the law of the land. The housing stimulus bill provides the boost our nation so desperately needs. It will help stabilize conditions in the housing market and lead to a correction of the crisis in confidence that has gnawed relentlessly at the U.S. economy. Just as important, it restores the strength of our badly damaged housing finance system, setting the stage for housing’s eventual return to full health.
One year ago, as we were just beginning to look forward to prospects for better times, the housing industry was dealt a devastating blow. The financial markets were rocked as they began to realize the full extent of the meltdown in subprime mortgages. Virtually overnight, the availability of credit became a major challenge for a large share of our prospective home buyers. For buyers who couldn’t come up with a traditional down payment or who didn’t have a sterling credit history, the options were discouraging. For buyers in the high-cost markets of California and elsewhere, where jumbo mortgages were the only game in town, lenders were less willing to make those loans; when they were available, a high premium was charged. The credit crunch was most intense in the hottest markets of the recent housing boom, but we saw its pernicious effects spread, threatening even parts of the country where conditions were basically sound. We saw the lingering damage this spring and summer, when the prime home buying season turned to drought in large parts of the country. Now, following a historic vote in Congress and the signature of the president, we at long last have the means to end this nightmare.
The milestone housing stimulus legislation modernizes the FHA so that it can return to a more meaningful role in the mortgage markets. It provides FHA insurance with a program geared to prevent families facing foreclosure from losing their homes. The law reforms the regulation of Fannie Mae and Freddie Mac and permanently increases the conforming loan limit to support buyers in more expensive areas; and it enables the U.S. Treasury to reassure the financial and global markets that the government is committed to ensuring the soundness of these two vital institutions.
It will take some time to maximize the potential of many of the provisions in the housing bill, but a $7,500 credit for first-time buyers good until July 1, 2009 provides home builders with a tool they can start using right away to improve their businesses. Prospective home buyers now have a major financial incentive to get off the fence and explore the advantages of buying a home in a buyer’s market. Your customers can find everything they need to know about the credit at a new NAHB Web site, www.federalhousingtaxcredit.com. Remember, the IRS isn’t in the business of publicizing tax benefits. It’s your job to get the word out.
It’s been a tough year, but thanks to our perseverance on Capitol Hill, we now have good grounds for optimism.