|Issue of the Day: Hurting Builders Look to Congress|
Published Monday, November 24th, 2008
Another industry, builders, tugs on the purse of Congress while the financial industry, this time Citigroup, gets $25 Billion to prop up its losses. Called ‘Fix Housing First’, the $250 billion package will, according the the builders industry, correct the housing price drop and thus fix the financial markets. To accomplish this, they want to introduce a tax credit of 10% of the home’s value up to $22,000 and a federal subsidy to lower the home mortgage rate from 6.2% to 3%. History recalls a similar package that was issued after the 1975 recession in which Congress gave a 5% tax credit up to $6000 and 1.5% drop in Home Mortgage Rate.
The Builder Industry has had an amazing rise in productivity in the last decade. The supply of over 2 million houses built each year as of 2007 and demand fueled by lenders were helping housing prices go through the roof and has created a situation where the builder industry has been pressured to build and build for a growing homeowner population. Now the reverse is occurring, where supply is outstripping the demand, causing the builders’ employment numbers to fall by 49,000 in October.