Robert I. Toll, CEO of Toll Brothers, at the UBS Building and Building Products Conference Wednesday, said of the housing market, in a few, simple words: "It stinks, its horrible."
Toll then jumped back into the the Fix Housing First effort to push Congress to pass a true tax credit for home buyers, and in regards to the muse of the plan--the stimulus package of 1975--he said, "Read the book, it has already been done. Do it again."
The only addition or change Toll said he would like to see to the proposed package--which asks for a tax credit of $10,000 to $22,000, as well as a government subsidized 30-year fixed rate mortgage at 2.99%, with a six-month introductory rate of 1.99%--would be to allow anyone who plans on holding the property for four years be included. "Make it available to everyone," Toll said. "If an investor wants to hold a property for four years, let him."
Toll called the stimulus plans the government has already enacted "insufficient" and "woefully wrongheaded." He was not a fan of the $300 billion going solely to the disadvantaged because the majority of those who took the deal are right back where they were before due to past loan modification programs that are not designed for continued falling prices.
He also spoke to House Speaker Nancy Pelosi's request of federal money going to infrastructure saying, "Bridges and tunnels are great. We need them. But they are not going to put as many people to work [as new home construction would.] The new home and used home industry is the backbone."
He said the same about the auto industry. "You don't hear a person talking about the equity he has from his Mercedes." Equity in homes shows wealth, he added.
The housing downturn, Toll pointed out, "happened by accident." Typically homes increase about 5% but during the up turn they were clocking in at increases around 10%, "and now we find ourselves in a mess of financial securities."
Questioned on the viability of the Fix Housing First plan, Toll said he doesn't know if it will work, he only knows that "we have to try." But the positive he is seeing in the market is building of pent up demand from buyers.
"When we run a special we see a wave of buyers come in and make a deposit," Toll said. "Now we will lose about 55%, and 25% will slink away during construction because they can't sell their existing home or their confidence wanes. But if we restore the confidence we will have a jump start."