Published: Wednesday, April 15, 2009
REVIVING THE HOUSING MARKET
A plan to get things moving
Despite the glimmers of hope President Obama, Federal Reserve Chairman Ben Bernanke and others may see on the horizon, the economy's short-term prognosis remains weak. Key to getting it healthy will be restoring some vigor to the ailing housing sector, and a creative but responsible plan now being pushed in Olympia aims to help with that.
The proposal would make a federal tax credit for first-time homebuyers go farther by allowing it to be put toward the actual home purchase. A provision of the federal stimulus package offers a credit of up to $8,000 to buyers who haven't owned a home in the past three years -- buyers must also have incomes of no more than $75,000 for an individual or $150,000 for a married couple to qualify -- but it's a refundable credit. In other words, you don't get the money until weeks or months after the home purchase has closed.
A budget proviso authored by the state Treasurer's Office and pushed by Sen. Steve Hobbs (D-Lake Stevens) and the state Realtors would set up a mechanism to get the tax-credit money to buyers at closing, removing the lack of a sufficient down payment as an obstacle.
The treasurer would deposit up to $25 million in a short-term, interest-bearing, federally-insured account to fund the program, and the institution receiving that deposit would in turn make a low-cost line of credit available to the Housing Finance Commission, which would pre-qualify borrowers for the federal tax credit and make that amount available at closing. The money is paid back as soon as the tax credit is made available. The Housing Finance Commission would assess a modest administrative fee to the buyer.
The state Realtors would put up $400,000 as security against unforeseen losses.
State Treasurer Jim McIntire estimates that up to 2,800 homebuyers could take advantage of the program -- no small number in today's market. "It's a start," McIntire says, a way to help get the housing market moving again.
The real-estate slump has hit private and public sectors hard. When home sales plummet, so do sales of appliances, furniture and other home fixtures. State, county and city budgets have suffered as real estate excise taxes have dwindled.
Responsible efforts to start turning those trends around -- that excludes a return to the practice of making mortgage loans that can't possibly be repaid -- are welcome. The Legislature should approve this one.
The proposal would make a federal tax credit for first-time homebuyers go farther by allowing it to be put toward the actual home purchase. A provision of the federal stimulus package offers a credit of up to $8,000 to buyers who haven't owned a home in the past three years -- buyers must also have incomes of no more than $75,000 for an individual or $150,000 for a married couple to qualify -- but it's a refundable credit. In other words, you don't get the money until weeks or months after the home purchase has closed.
A budget proviso authored by the state Treasurer's Office and pushed by Sen. Steve Hobbs (D-Lake Stevens) and the state Realtors would set up a mechanism to get the tax-credit money to buyers at closing, removing the lack of a sufficient down payment as an obstacle.
The treasurer would deposit up to $25 million in a short-term, interest-bearing, federally-insured account to fund the program, and the institution receiving that deposit would in turn make a low-cost line of credit available to the Housing Finance Commission, which would pre-qualify borrowers for the federal tax credit and make that amount available at closing. The money is paid back as soon as the tax credit is made available. The Housing Finance Commission would assess a modest administrative fee to the buyer.
The state Realtors would put up $400,000 as security against unforeseen losses.
State Treasurer Jim McIntire estimates that up to 2,800 homebuyers could take advantage of the program -- no small number in today's market. "It's a start," McIntire says, a way to help get the housing market moving again.
The real-estate slump has hit private and public sectors hard. When home sales plummet, so do sales of appliances, furniture and other home fixtures. State, county and city budgets have suffered as real estate excise taxes have dwindled.
Responsible efforts to start turning those trends around -- that excludes a return to the practice of making mortgage loans that can't possibly be repaid -- are welcome. The Legislature should approve this one.
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