The National Association of REALTORS, of which I am a member, typically does a fair job with vision and lobbying. Unfortunately they’ve recently steered off the tracks with their push to support a new housing stimulus bill. These are the issues I have in particular:
The plan to turn the $7500 15 year interest-free loan for first time buyers into a $7500 GIFT for ALL buyers.
- This plan would definitely spur housing sales, but does so by just indiscriminately throwing money at the problem.
- There are many areas and many buyers that would take advantage of this money but don’t necessarily need it… the neighborhoods are stable and healthy and/or the buyer was buying anyway.
- This money targeted directly at neighborhoods that have be absolutely obliterated by the housing downturn would be much more effective in relieving pain.
The plan to give all buyers a 4.5% fixed rate 30-year loan.
- While this would give buyers savings of approximately $90/mo. on a typical home or allow them to purchase $15,000 more home (based on median prices) doing so only puts an artificial bottom on our house prices and demand.
- When the program ends the houses look overpriced again… how does that help us?
- Again, a more useful tact would be to provide below-market-rate loans in the neighborhoods that have been hit the hardest to try to breathe life back into them. This limited program would be substantially less costly and would help save communities that might otherwise take many years to bounce back.
NAR should wake up and learn that throwing unlimited money at the housing market will not solve housing’s long-term problems and that in many cases we simply need to let the market fundamentals drive housing forward.
