WASHINGTON, Aug. 10 -- To help create jobs and set the stage for a strong recovery, the National Association of Home Builders today called on Congress to extend and enhance the $8,000 first-time home buyer tax credit due to expire on December 1.
Specifically, NAHB is asking Congress to extend the home buyer tax credit program through November 30, 2010 and make it available to all buyers of principal residences.
"If Congress acts to extend the tax credit program, it would spur 383,000 additional home sales, including 80,000 housing starts, creating nearly 350,000 jobs over the coming year," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "That's good for the economy and good for America."
Although there have been some signs of economic stabilization in recent weeks, the unemployment rate is rapidly approaching double-digits. Without a concerted focus on the housing sector, which comprises more than 15 percent of the GDP, any hope for a recovery could fade.
"At best, it looks like a jobless recovery once it gets underway," said Robson. "This is why Congress needs to take bold, meaningful action now."
In addition to extending the tax credit, Robson said home builders will be meeting with their lawmakers in their home districts during the August congressional recess and urging them to:
-- Correct a faulty appraisal process. The inappropriate use of distressed and foreclosed sales as comps in determining home values is hurting home values and killing home sales. The situation is so bad that a recent NAHB survey of more than 500 builders found that one out of every four new-home sales are lost because appraisals are coming in below the contract sales price. NAHB is urging Congress to work with housing and federal regulators to adopt and enforce clear, concise regulatory guidance that will allow appraisers to develop realistic valuations based on sales that are truly comparable. Lawmakers should also call on the Federal Housing Administration, the Federal Housing Finance Agency, Fannie Mae, and Freddie Mac to establish an appeals process similar to the one used by the Veterans Affairs Loan Guaranty Program. Under the VA program, the appraiser is required to seek more information when it appears the appraised value will fall short of the sales price.
-- Improve housing credit conditions. Since there can be no meaningful economic recovery until the flow of credit is restored to housing, NAHB is calling on Congress to urge regulators and the banking industry to end the stranglehold on acquisition, development and construction (AD&C) loans that has emerged as a major impediment to the housing recovery. Lenders are refusing loans for viable new housing projects and cutting off funding or calling performing outstanding loans, producing unnecessary foreclosures and losses on AD&C loans. Congress needs to urge regulators to allow and encourage lenders to give leeway to residential AD&C borrowers who have loans in good standing by providing flexibility on re-appraisals, loan modifications and perhaps forbearance to give builders time to complete and sell their lots and homes.
-- Co-sponsor Net Operating Loss (NOL) relief legislation in the House and Senate. NOL bills H.R. 2452 in the House and S. 823 in the Senate would prevent further layoffs in building and other industries hit hard by the recession. The legislation would help all businesses by eliminating the current $15 million cap on average annual gross receipts and allowing 2009 losses to be eligible for the expanded carryback. In addition, the bills would also help taxpayers who have been hit by the Alternative Minimum Tax to fully benefit from any NOL carryback. The bills both enjoy bipartisan support. Currently, H.R. 2452 and S. 823 have 92 and 37 co-sponsors, respectively.
Taken together, these four issues - extending the $8,000 home buyer tax credit for one year and making it eligible for all home buyers; bringing common sense to the appraisal process; urging banking regulators to ease AD&C credit; and passing the NOL carryback legislation - will not only create needed jobs for American workers quickly, but also stimulate demand for goods and services throughout Main Street America.