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Home Builders Push for New Housing Plan
Home builders in the United States are now pushing the government for new benefits from
taxes and mortgages in hopes to help the frail housing market recover at a faster pace.
In the seventies housing crisis, two measures were taken to fight it. Home buyers
received a nice sized tax credit for their purchase and there was a federal program instilled to decrease
mortgage rates making them lower than average market. The new proposal suggests reviving both
of these measures.
The industry giants will begin trying to sell their plan to lawmakers in the next week or two, with the
idea and hope that it will be added to the stimulus plan Democrats are expected to push after the
presidential election.
Many experts agree that the housing market needs to be the main priority in fixing the current state of
the economy. The plan, if passed, will resurrect policies from the housing crisis in the mid-seventies. At that
time, Congress had passed a tax credit of two thousand dollars on new home sales. Now they are trying to
get a tax credit of, at a minimum, twelve thousand dollars and possibly up to twenty-two thousand, which would
be contigent upon that area's median price.
The other plan is to copy what the seventies plan did for mortgages, which was to subsidize rates for select borrowers. In
the seventies, the government owned Ginnie Mae would buy loans at full price from lenders, but would buy them at under
market rates and then they would resell them at under market price, eating the difference.
As of now, the idea is for the tax credit and the mortgage subsidy program to last around half a year to nine months. The
difference compared to the seventies is the incentives would not just apply to new home sales, but also would
apply to existing home sales. In addition, the plan also calls for a true tax credit rather than loan that
the buyer would have to pay back. The $7500 tax credit that is already in place has done little to stimulate
the housing market because most buyers just see it as more debt. The new plan insists that the tax credit will
not have to be repaid to the government.
Marin Real Estate Blog
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