fbpx

Blog

This should help buyers of homes in our Maryland, Washington D.C. and Virginia suburbs:

http://www.bloomberg.com/news/2011-11-18/u-s-congress-votes-to-raise-top-limit-for-government-insured-mortgages.html

Housing Industry Wins Higher FHA Mortgage Limits
By Phil Mattingly – Nov 18, 2011

The U.S. housing industry has scored a victory with House and Senate votes to raise the size of mortgages backed by the Federal Housing Administration to $729,750.

The measure split Republicans, many of whom supported retaining the lower limit of $625,500. As a result, efforts to restore the higher limit fell short until the Senate attached an increase to a package of spending bills that were passed yesterday by both the House and Senate.

The higher FHA limit is expected to become law after the president signs the spending measures, which he must do by the end of today to avoid a government shutdown.

“Restoring the higher loan limits for the FHA will provide homeowners and homebuyers with safe and affordable financing, while providing a much-needed boost to housing markets all around the country,” James W. Tobin, chief lobbyist for the National Association of Home Builders, wrote in a Nov. 16 letter to Speaker John Boehner, an Ohio Republican.

Lawmakers who backed higher limits said withdrawing federal support could further undermine a housing market still struggling to recover from the 2008 credit crisis.

The final compromise, which dropped a similar increase to loans backed by mortgage firms Fannie Mae and Freddie Mac, represents a mixed victory for the housing industry.

While the increase to $729,750 is expected to spur some additional homebuying, it’s not clear by how much. FHA loans make up a smaller share of the market than those purchased by Fannie Mae and Freddie Mac.

5.3 Million Homes

Still, the measure was fully embraced by trade groups for homebuilders and realtors. The National Association of Homebuilders has estimated that 5.3 million homes lost their eligibility for conforming loans when the higher limits expired on Oct. 1. Nearly 670 counties saw their loan limits decline, according to the National Association of Realtors.

On the other side were a number of interest groups that push for free-market policies and against government support to the housing market. Those groups, which include the Club for Growth and Heritage Action for America, play a large role in the House Republican conference and can influence campaign funding for the next election.

Republicans backed by the groups thought efforts to increase the loan limits had been defeated earlier this year, particularly when the White House announced support for allowing them to go back down to pre-crisis levels.

‘Completely Bizarre’

“This is completely bizarre that the Congress would be to the left of this president on housing finance,” Representative Patrick McHenry, a North Carolina Republican on the House Financial Services Committee, said in an interview.

House Republicans who opposed the provision seized on the FHA’s annual actuarial report released earlier this week, which said the agency has a 50 percent chance of needing to seek taxpayer aid to bolster its insurance fund.

The FHA, which provides liquidity by protecting lenders against borrower defaults, has increased its share of the mortgage market in the wake of the credit crisis. The agency, created in 1934 during the Great Depression, now guarantees a third of U.S. mortgages, according to the report.

The House-passed legislation, approved in a 298-121 vote, was opposed by 101 members of the House’s Republican majority, some of whom said they opposed the measure primarily because of the loan-limit increase.

Representative John Campbell, a California Republican who pushed for the increase, called the compromise on the provision “just a bad deal.” Campbell said he would have preferred that lawmakers boost the limit for Fannie Mae and Freddie Mac over raising the FHA limit.

‘Short-Term Fix’

“I’m glad something got done, but because they got it backwards, this will be a much more short-term fix than I would have hoped,” Campbell said in an interview.

The Senate followed the House’s lead a few hours later, voting 70-30 to clear the measure for Obama’s signature. The provision was once again cited by several Republicans as a reason for their opposition.

“Raising the loan limits at FHA only, an unprecedented move, will simply drive more business into Ginnie Mae securities and put the FHA at even greater risk of losses to taxpayers,” Senator Bob Corker, a Tennessee Republican, said yesterday. “If we cannot even take this simple step, we risk crowding out the private sector for years to come.”

To contact the reporter on this story: Phil Mattingly in Washington at pmattingly@bloomberg.net.

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Homebuyers want the benefits of more energy efficient new houses, but, are they willing to pay for these features?

Well, according to a recently conducted member survey of the National Association of Home Builders (NAHB) – Homeowners are not willing to pay that much for these features.

Only 57% of buyers were willing to pay more for “green
features” – 2% more, at most!

This is just more evidence that cost/benefit is a key factor in most buyers decision to GO GREEN.

Features that improve water efficiency were preferred more by home buyers in the west, while interest in using recycled materials is relatively higher in the Northeast, and rather low in the South.

Although only 11% of builders nationwide reported clients requesting environmentally friendly features, energy efficiency is still the primary motivation in the green building movement.
The NAHB said “In all, survey findings indicate that, as Congress continues to debate how to encourage more energy-efficient construction via new legislation, it must keep affordabilty in mind and look for ways to incentivize changes, not only to newly built homes but to the overall housing stock.”

Let me know how how important energy efficient and green features are in your new home plans. Send me an email at rob@paramountconstruction.net.

Also, you can send your questions to: MondayMorningQuestions@nahb.com.

New Home builders, big and small, would be among the winners if the $838 billion stimulus measure the U.S. Senate passes today.

The Senate bill seems to be more generous to home builders than the House was in the $819 billion measure it passed last month.

President Barack Obama, who spoke to the nation last night, has said he wants stimulus legislation signed by this weekend. President Obama is counting on the plan to help revive the economy. The economy has lost 3.6 million jobs since December 2007. This has caused the unemployment rate to soar to the highest level since 1992.

To quote a Bloomberg wire: “In a bill this big, there are countless private-sector winners and losers,” Rogan Kersh, associate dean of New York University’s Wagner School of Public Service was quoted as saying.

The Senate cleared the stimulus proposal yesterday by a vote of 61 to 36. There were three Republicans siding with Democrats.

It’s quite possible that U.S. home builders could see sales increase if consumers tap into the planned tax credit of $15,000, or 10 percent of the purchase price, whichever is less, under the Senate legislation.

Morningstar analyst, Eric Landry said “If someone’s going to give you $15,000 in free money it has to be stimulative”.

The proposed new tax credit does not have to be repaid. And it appears that all home buyers are eligible for the home purchase tax credit. This proposed home tax credit would replace the $7,500 tax credit for first-time home buyers that was passed sometime last year. In addition to the amount of the proposed home purchase tax credit, another difference is that the $7,500 home tax credit had to be repaid over 15 years.

Jerry Howard, president and chief executive officer of the National Association of Home Builders stated, “We’re pretty happy with the way the Senate bill is shaping up. We think it will entice a lot of those people sitting on the sidelines into the marketplace.”

As a home builder building new homes in the Washington D.C. area, I feel lucky because our area inside the Washington D.C. beltway is relatively strong. Values have held up and business is steady. So I can see real benefits to home builders, subcontractors and home building and remodeling vendors.

We also work with a large number of families and individuals that are just starting out and are looking for their first home to purchase. So it will be a huge benefit to individuals and families like that. But I’m not sure it is the best thing in the long run for our economy.

What do you think? Let me know your thoughts and comments.

This is some great news if it passes and is from a newsletter we subscribe to call

Builder Business Update:

Senate Adds $15,000 Home Buyer Tax Credit to Stimulus
Amendment to Senate version of stimulus bill provides the credit to all home buyers and doesn’t require repayment.
By Pat Curry

The U.S. Senate on Wednesday voted unanimously to approve a home buyer tax credit of $15,000 or up to 10 percent of the purchase price in its version of the stimulus bill. This proposed credit would be available to all home buyers and would not have to be repaid as long as a buyer lives in the house for at least two years. The amendment to the Senate’s economic stimulus package, co-sponsored by Sen. Johnny Isakson (R-Ga.) and Sen. Joe Lieberman (I-Conn.), offers the credit on purchases from one year of the date of enactment and could be applied to the home buyer’s 2008 taxes.

Isakson, who spent more than 30 years in the real estate business, proposed the tax credit because he’d seen it used effectively to jump-start housing in the 1970s.

“It is rare that we have a road map to success in times of difficulty, but this country has once before realized a housing crisis every bit as bad as the one we have today and economic troubles every bit as dangerous,” Isakson said in a prepared statement Wednesday evening. “We have a pervasive housing problem, and we have a historical precedent that works. I am proud this Senate has joined together, learned from history, and repeated a method that worked by adopting this amendment.”

Dwight Jaffee, a professor of finance and real estate at the Haas School of Business at the University of California, Berkeley, called the 1973-1975 recession the “classic example” of how a direct stimulus to housing demand impacted economic recovery. “Housing led us into this recession, and we really need a stimulus for it to lead us out,” Jaffee said in a statement released by the Fix Housing First coalition, a group of home builders, manufacturers, and others advocating for several housing-related measures, including the tax credit.

According to Jerry Howard, the NAHB’s CEO, the amendment’s provision to offer the tax credit for a year from the date of enactment “reflects Sen. Isakson’s in-depth understanding of housing. It gives the people who market housing a chance to ramp this up and put it in its proper perspective in the field.” Depending on the enactment date, it could make the tax credit available well into 2010. (In previous versions, the tax credit was only availble through Dec. 31, 2009.)

Howard also said Thursday that the NAHB’s staff is working closely with the Senate offices of Sen. Mitch McConnell (R-Ky.), John Ensign (R-Nev.) and Lamar Alexander (R-Tenn.) on additional amendments that the Fix Housing First Coalition considers crucial to solving the housing crisis. Those include low-interest mortgages for home buyers and additional measures to stem foreclosures.

The National Lumber and Building Material Dealers Association also issued a statement this morning applauding the adoption of the amendment and thanking the senators for their leadership. “We believe, if adopted in the final stimulus package, the tax credit could go a long way toward reviving the housing economy by encouraging more home purchases, creating new jobs, and restoring consumer confidence in the housing market,” said NLBMDA President and CEO Michael O’Brien.

The Fix Housing First coalition, which includes the NAHB and NLBMDA, continues to advocate for additional housing stimulus measures, including an amendment that would provide discounted 30-year fixed-rate mortgage financing for eligible home buyers.

In appearances on television news shows, several senators this week expressed support for such an amendment. “We have a 4% mortgage proposal where creditworthy home buyers could buy down their mortgages or save them on the average $5,600 a year,” Sen. McConnell said on Sunday on “Face the Nation.”

One disappointment for home builders in the bill is that this amendment does not include the ability to monetize the credit at closing, a feature in an earlier bill Isakson filed in mid-January. “Emails were flying back and forth this morning, asking ‘Can it be used for closing?’” says Michelle Smallwood, vice president of sales for Melbourne, Fla.-based Holiday Builders.

Pat Curry is senior editor, sales and marketing, at BUILDER magazine.Senate Adds $15,000 Home Buyer Tax Credit to Stimulus
Amendment to Senate version of stimulus bill provides the credit to all home buyers and doesn’t require repayment.

By:
Pat Curry

The U.S. Senate on Wednesday voted unanimously to approve a home buyer tax credit of $15,000 or up to 10 percent of the purchase price in its version of the stimulus bill. This proposed credit would be available to all home buyers and would not have to be repaid as long as a buyer lives in the house for at least two years. The amendment to the Senate’s economic stimulus package, co-sponsored by Sen. Johnny Isakson (R-Ga.) and Sen. Joe Lieberman (I-Conn.), offers the credit on purchases from one year of the date of enactment and could be applied to the home buyer’s 2008 taxes.

Isakson, who spent more than 30 years in the real estate business, proposed the tax credit because he’d seen it used effectively to jump-start housing in the 1970s.

“It is rare that we have a road map to success in times of difficulty, but this country has once before realized a housing crisis every bit as bad as the one we have today and economic troubles every bit as dangerous,” Isakson said in a prepared statement Wednesday evening. “We have a pervasive housing problem, and we have a historical precedent that works. I am proud this Senate has joined together, learned from history, and repeated a method that worked by adopting this amendment.”

Dwight Jaffee, a professor of finance and real estate at the Haas School of Business at the University of California, Berkeley, called the 1973-1975 recession the “classic example” of how a direct stimulus to housing demand impacted economic recovery. “Housing led us into this recession, and we really need a stimulus for it to lead us out,” Jaffee said in a statement released by the Fix Housing First coalition, a group of home builders, manufacturers, and others advocating for several housing-related measures, including the tax credit.

According to Jerry Howard, the NAHB’s CEO, the amendment’s provision to offer the tax credit for a year from the date of enactment “reflects Sen. Isakson’s in-depth understanding of housing. It gives the people who market housing a chance to ramp this up and put it in its proper perspective in the field.” Depending on the enactment date, it could make the tax credit available well into 2010. (In previous versions, the tax credit was only availble through Dec. 31, 2009.)

Howard also said Thursday that the NAHB’s staff is working closely with the Senate offices of Sen. Mitch McConnell (R-Ky.), John Ensign (R-Nev.) and Lamar Alexander (R-Tenn.) on additional amendments that the Fix Housing First Coalition considers crucial to solving the housing crisis. Those include low-interest mortgages for home buyers and additional measures to stem foreclosures.

The National Lumber and Building Material Dealers Association also issued a statement this morning applauding the adoption of the amendment and thanking the senators for their leadership. “We believe, if adopted in the final stimulus package, the tax credit could go a long way toward reviving the housing economy by encouraging more home purchases, creating new jobs, and restoring consumer confidence in the housing market,” said NLBMDA President and CEO Michael O’Brien.

The Fix Housing First coalition, which includes the NAHB and NLBMDA, continues to advocate for additional housing stimulus measures, including an amendment that would provide discounted 30-year fixed-rate mortgage financing for eligible home buyers.

In appearances on television news shows, several senators this week expressed support for such an amendment. “We have a 4% mortgage proposal where creditworthy home buyers could buy down their mortgages or save them on the average $5,600 a year,” Sen. McConnell said on Sunday on “Face the Nation.”

One disappointment for home builders in the bill is that this amendment does not include the ability to monetize the credit at closing, a feature in an earlier bill Isakson filed in mid-January. “Emails were flying back and forth this morning, asking ‘Can it be used for closing?’” says Michelle Smallwood, vice president of sales for Melbourne, Fla.-based Holiday Builders.

Pat Curry is senior editor, sales and marketing, at BUILDER magazine.

Question:
Do you think this is a good idea as a taxpayer?
If you are in the market to purchase a home, will this impact your decision to buy a home?