Atlanta Real Estate Blog

Pass Another Jolt Cola - Son Of Housing Stimulus

Congress returns the week of September 13th with elections coming and an ailing economy.  Some say we are bumping along the bottom in an L-shaped recovery.  Others claim it's the start of a double-dip recession.  Fearless forecasters say that the glass is half full and soon we'll be enjoying an V-shaped recovery.  Our cunning legislators - not wishing to miss a beat or a chance to take credit - are already conjuring some new form of housing stimulus.

Did the housing stimulus really help?

Clearly, the last housing stimulus put more money in motion.  In July, the IRS reported to the House Ways and Means Subcommittee that the home buyer tax credit cost $23.5 billion  - $16.2 billion for the first time and move-up credits and $7.3 billion for interest-free loans.  Starting in January, these homeowners will begin repaying these loans.

Similarly, the Department of Housing and Urban Development has also allocated an outlay of nearly $6 billion for the Neighborhood Stabilization Program (NSP).   NSP is intended to provide funds to state and local governments and non-profit housing developers for community redevelopment.  The funds are earmarked for acquiring property  and demolishing or rehabilitating foreclosures.  They may also provide assistance funding to low- to middle-income homebuyers for downpayments and closing costs.  Soon NSP will gain an additional $1 billion in funding.  Unlike other programs, the emphasis of NSP is to increase owner-occupied properties.  To reduce the number of vacant and foreclosed homes, NSP provides a first right of refusal for those grantees who buy foreclosures versus investors.

Jumpstarting The Land Grab

Price sells homes - regardless of whether the lower prices come from government stimulus or oversupply.  Currently inventories are at 9+ month levels.  For housing to recover, these record-high inventories need to come down, so some pundits hope that the new housing stimulus will target short sale and foreclosure buyers.  They claim that getting this glut sold may begin to stabilize prices and trim the excess inventory.

Government stimulus is temporary and both buyers and sellers understand that.  It's like trying to build your children's muscles by giving them candy.  While we welcome and encourage stimulus to help get the housing market moving, stimulus alone won't produce jobs and help our citizens recover confidence in their economic futures.  It's about JOBS - NOT HANDOUTS!

Tags: Another Homebuyer Tax Credit, short sales, foreclosures, home inventories, vacant and foreclosed homes, owner-occupied properties, housing oversupply, NSP, Neighborhood Stabilization Program, JOBS Not Handouts, ATLShortSales.com.