I mentioned yesterday that the National Association of Home Builders was in Washington looking for their own bailout, and now we have some more details, startling ones at that.
The NAHB wants mortgage rates reduced (subsidized) to as low as 2.99 percent on 30-year fixed-rate conventional mortgages purchased between January 1 and June 30 of this year, followed by rates of 3.99 percent for the latter half of the year.
Additionally, they want the current $7,500 home buyer tax credit bumped up to 10 percent of the home’s purchase price, capped at 3.5 percent of local FHA loan limits.
That would result in a range between $10,000 and $22,000, available to all purchasers, and would come with the elimination of the recapture provision.
The whole plan is being coined as “Fix Housing First,” with the hope it becomes the main focus of the pending stimulus plan bouncing around Washington.
And now for the shocking part: “The excess housing inventory in today’s market is the result of unprecedented foreclosures, not overbuilding. That’s why we support Sheila Bair’s foreclosure relief plan and any common-sense proposal to alleviate the foreclosure problem,” NAHB chief Jerry Howard said in a statement.
So the excess supply of housing inventory is not the result of overbuilding? Hmm…
If I recall, the foreclosures came after years of overbuilding that eventually led to an oversupply and subsequent price depreciation.
Face it; you can’t take a drive for more than 20 minutes in a metropolitan area without coming across a new, sprawling development full of vacant cookie-cutter homes.
And it’s near impossible not to pass a corner where a young sign-spinner is urging you to check out the latest, new development full of “luxury” condos and single-family homes.
So what’s the big plan for the homebuilders? Lower rates to fill up all their vacant, new properties with more families so they can cut their losses and run? How long before that backfires and we’re in an even bigger mess?
Home prices must fall.