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Posted February 14, 2009 | Copyright © The Northern Virginia Daily
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Speaker: Expanded home buyer tax credit would help builders
By James Heffernan — Daily Staff Writer
WINCHESTER — A few months ago, homebuilders were viewed as part of the problem, a spoke in the wheel of an economy speeding downhill.
But thanks to the efforts of local homebuilder associations across the country, housing has become a part of the solution for recovery on Capitol Hill.
The Top of Virginia Building Association welcomed Karl J. Eckhart, political director of the National Association of Home Builders, on Thursday morning for a report on the government stimulus package’s impact on the housing industry.
As recently as last month, “everyone was piling on us,” for contributing to the soured real estate market, Eckhart said. But home buying serves as an economic engine for the U.S. economy, and it needed to be in the discussion in Washington, he said.
“The home buyer gives us the economy we need to get back to work,” he said.
The Senate version of the stimulus package includes an expanded tax credit of $15,000 for anyone buying a new home, regardless of income. The proposal, in the form of an amendment to the bill, would double the existing tax credit of $7,500 and eliminate the repayment requirement for first-time home buyers.
Sens. Joseph Lieberman, I-Conn., and Johnny Isakson R-Ga., sponsored the amendment, which cleared the Senate but later died in the House. However, the measure did make it to a conference committee.
Eckhart said the final figure will likely be in the $8,000 range.
“We went in with a fully loaded Cadillac Escalade, and we hope we come out with a Buick with a CD player,” he told TVBA members.
The home buyer tax credit is only one piece of the stimulus package designed to help jump-start the housing market, Eckhart said.
An amendment offered by Sen. Patty Murray, D-Wash., would permanently reinstate the loan limits for the Federal Housing Administration, Fannie Mae and Freddie Mac that fell dramatically on Jan. 1. The current loan limit is $625,500; the Murray amendment would reset it to the 2008 limit of $729,750.
“This would help bring people into the market,” Eckhart said.
Another piece involves the creation of a mortgage rate buy-down of between 4 and 4.5 percent for new mortgages through the end of 2010. At closing, the federal government would pick up the difference between existing rates and the buy-down rate.
“If we can get them to extend that to refinancing, we’ve got something,” Eckhart said.
Dale White, president of the Top of Virginia Builders Association, said afterward that home-building is beginning to pick up across the region as foreclosures level off and interest rates remain historically low.
“Everybody’s got something going on right now,” he said of the industry.
The inventory of unsold homes on the local market has fallen in the past year to below 800, he said. Around 400 is normal, he said.
“As that continues to drop, and the fear is not there on the part of the consumer, I think we’ll be OK,” he said.
The House passed the stimulus package on Friday afternoon, and the Senate was expected to follow suit that night. President Obama could sign the package into law on Monday.
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