Just six months after Congress came within a whisker of getting a $15,000 tax credit for first-time home buyers, a group of chief executive officers in the real estate, building products and home goods industries are mounting a new effort to expand the credit from its current $8,000 maximum and make it available to all buyers, not just first-timers.
The Housing Working Group of the Business Roundtable, an association of chief executive officers of leading U.S. corporations, today also announced it supports ongoing efforts by the Federal Reserve to keep 30-year fixed mortgage interest rates at historically low levels and do so for the next 12 months, and a comprehensive review of existing foreclosure mitigation and loan-modification programs.
“We recognize the earlier efforts made by the Administration and Congress, but strongly recommend taking additional steps to jumpstart the lagging housing market in order to stimulate a broader economic recovery,” said Richard A. Smith, President and CEO of Realogy Corporation and Chair of Business Roundtable’s Housing Working Group.
“If the housing market is not corrected or stabilized, the tide of the recession is not likely to reverse in the near term, and the slide in the economy overall will continue. 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.”
Early returns on 2008 taxes suggest that last year’s version of tax credit-a version less attractive to buyers-is working. That version requires buyers to repay the credit and its value to taxpayers was capped at $7500 not the current $8000. According to very preliminary figures from the IRS, some 567,685 taxpayers claimed more than $3.9 billion worth of first-time homebuyer credits on their 2008 tax returns. Even though 38,158 of them may be disqualified because the IRS has found they had ownership in a personal residence within the past three years, the total will certainly exceed the $4.6 billion estimated by Congress last year. These preliminary returns suggest means the credit helped to make possible at least ten percent of the roughly 5 million new and existing home sales last year. No doubt it was a deal maker in many of those transactions. The preliminary figures were from returns received by March 6-five weeks before 2008 returns were due. Read more about it at First-timer Tax Credit is Working.
Imagine what a difference a $15,000 credit available to all buyers with the improvements that have since been made would make to the marketplace today. These improvements include no need to repay and the credit can be used to finance closing costs (but not down payments) at the time of sale.
In addition to Smith and John J. Castellani of the Business Roundtable, , the Housing Working Group consists of: Thomas C. Nelson, Chairman, President and CEO of National Gypsum Company; Steve Odland, Chairman and CEO of Office Depot; Daniel S. Fulton, CEO of Weyerhaeuser Company; Jeff M. Fettig, Chairman and CEO of Whirlpool Corporation; Michael H. Thaman, Chairman and CEO of Owens Corning; and Roger Fradin, President and CEO of Honeywell Automation and Control Systems.