TENTATIVE Agreement in Senate on Homebuyer Tax Credit

Homebuyer Credit Gets New Life

Key lawmakers in the Senate have tentatively agreed to extend the existing $8,000 tax credit for first-time home buyers and also offer a new $6,500 credit for existing homeowners who have lived in their current residence for a consecutive five-year period in the past eight years.

Home buyers must be under contract by April 30, 2010, and close before July 1. House Democrats have expressed concern about the cost of the tax credit for the government, and allegations of abuse have resulted in an IRS probe of the program.

Source: Wall Street Journal, Corey Boles and John D. McKinnon (10/29/09)

© Copyright 2009 Information Inc.

HOMEBUILDERS SAY BANK CREDIT CAN HELP ECONOMY

Monday, 24 August 2009
By Mike Fitts
mfitts@scbiznews.com

COLUMBIA — Several top Southeast homebuilders contend that federal regulators need to let more banks make loans to homebuilders so that the industry can help revive the American economy.

Regulators have told bankers that new housing construction is a highly risky loan category in this economy, and the resulting constriction in credit is prolonging the industry’s woes, several leaders of the home building industry said Thursday.

The Carolinas and Georgia have relatively healthy economies, except for the credit crunch, said David Crowe, chief economist of the National Association of Home Builders.

With the exception of metro Atlanta, these states never took as high a run-up in the boom years and have seen relatively less damage in the downturn, he said.

If credit were to become more available, homebuilding could increase, and a ripple effect would be to boost weakened employment, he said. The housing industry could have a strong impact on jobs because so many other industries also rely on it, he said.

Homebuilding is about 15% of the U.S. gross domestic product and has led the economy out of previous recessions, Crowe said.

Congress should make clear to regulators that it’s time for more lending to homebuilders, said Frank Wiesner, CEO of Olde South Homes in Raleigh, N.C. Homebuilding has been buoyed on the lower end of the market by the $8,000 credit for new buyers, but that boost is winding down, as the program will end in the fall.

Steven Mungo, CEO of Mungo Cos. and president-elect of the Home Builders Association of South Carolina, agrees that the crunch is limiting economic revival. He said he was contacted by a builder who had five homes under contract to build, but the bank would lend him money for only three. The builder asked Mungo to take on the other two.

Such tight credit will make a bad housing market worse, Wiesner said. This year is likely to produce the fewest homes built in the U.S. since the 1940s, when the country’s population was half its current level, he said.