Business Leaders Push To Expand Housing Tax Credit

by Joe Manausa on June 11, 2009

In yesterday’s edition of the online edition of the Wall Street Journal, it was reported that a group of business executives issued a set of recommendations for the White House and Congress that are aimed at jump-starting the housing market in order to stimulate a broader economic recovery. How is this important in the Tallahassee Real Estate Market?

Business Roundtable Wants Tax Credit For All Home Buyers

We have written quite a bit here lately about the First Time Homebuyers Tax Credit, so this is directly related to that program. The Business Roundtable, an association of chief executive officers of leading U.S. corporations, feels that the best way to boost the economy is to stimulate the demand side of the real estate market.

In their press release, they stated “We believe targeted, demand-side solutions – such as the ones Business Roundtable is recommending today – will provide a critical next step for a housing recovery that will help create jobs and boost the economy as a whole.” So, what exactly are their recommendations?

Demand Will Strengthen If Mortgage Rates Are Kept Low

The Business Roundtable’s recommendations are as follows:

• Keep mortgage interest rates at historically low levels (below 5 percent) for at least one year;
• Expand the current First-Time Homebuyer Tax Credit incentive from the lesser of 10 percent of the purchase price of the home or $8,000 to a higher limit of either 10 percent or $15,000 for all homebuyers, remove the income restrictions and include all primary residence purchases for one full year;
• Conduct a thorough review of current foreclosure mitigation and loan-modification programs in light of rising loan-modification re-default rates;
• Make permanent the current temporary conforming loan limits; and
• Continue to review and strengthen government efforts already underway to review and refine mortgage lending practices.

Housing Related Industries Account For More Than 20% Of The Gross Domestic Product (GDP)

The group feels that the economic recovery of our country is tied as much to housing as any other industry. According to Richard A. Smith, the Chairman of the Housing Working Group, ”housing-related industries account for more than 20 percent of the U.S. gross domestic product, the recovery of the residential housing market is vital to the recovery of the U.S. financial markets and the overall economy. Stimulating the housing market from a demand-side perspective is key to putting America back on the path to economic growth. Business and government must work together to find immediate and long-lasting solutions that address the challenges facing the U.S. economy.”

Fix Housing And You Will Fix The U.S. Economy

Ultimately, the group argues that economic recovery in the United States is not going to begin until the housing industry starts to recover. They feel like they have outlined a plan for that recovery to begin this year, but I’m curious what our readers think?

Is more government involvement going to help, or just compound the problem? Is this just “propping up” an economy that was based on housing valuations out of control? Please give voice to your opinions in the comments area below.