National Association of Home Builders Requests Subsidies for Mortgages 2


Developers who had plans to develop Oakmont V and more recently the Verdugo Hills Golf Course must be secretly thankful for the opposition (thanks to V.O.I.C.E.) which prevented them from building hundreds of homes on local hillsides. I imagine Oakmont V would have come on the market just about now.

I just read a self-serving prescription for economic recovery (exerpted in Calculated Risk) offered by the National Association of Home Builders, with our local builders’ good luck in mind:

“…If there’s any hope of turning this economy around, Congress and the Administration need to focus on stabilizing housing,” said NAHB Chairman Sandy Dunn, a home builder from Point Pleasant, W.Va.. “Tremendous economic uncertainties have driven consumers from the housing market, and it’s going to take some major incentives to bring them back. Beyond the work that is being done to help reduce foreclosures, Congress must immediately incorporate such incentives for qualified buyers in a new economic recovery package.”

“The housing downturn has already cost America three million jobs in construction and related industries, and this downward momentum cannot be stemmed without substantive government intervention,” agreed NAHB’s new Chief Economist, David Crowe.

While our existing urban neighborhood became more and more crowded, and current homeowners protested construction of new developments, builders continued to push for hundreds of new homes on remaining hillsides. Now, according to the LA Times (November 16, 2008),

The National Association of Home Builders wants Barack Obama and the new Congress to use deep mortgage interest rate “buy-downs” – rate reductions to 2.99% or 3.99% – plus federal income tax credits to jolt housing sales and construction back to life. The National Association of Realtors, the largest housing lobby, also is asking the new administration for mortgage subsidies and tax credits.

Rewording these two statements, I get the following: Home builders think the U.S. government should guarantee home building industry bets and save builders from ruin.

One comment at Calculated Risk asks, “Where have the free markets gone?” There’s no doubt outstanding construction loans are in peril, and the repurcussions of a collapse in demand for new housing will be wider than anticipated. But asking government to prop up an industry that fed upon and expanded itself throughout this bubble is, I believe, asking too much.


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