RISMEDIA, August 20, 2009-As Realtors nationwide alongside the government work to create new programs and innovative strategies in order to lure new buyers into the market, now may be a good time to look at the way in which the American Recovery and Reinvestment Act of 2009 has affected not only the real estate industry, but the economy as well. In this month’s NAR Power Broker Roundtable, real estate professionals discuss whether the Stimulus Package is doing its job and what needs to be done in addition to stimulate the economy.
Virginia Cook, Special Liaison for Large Firm Relations, NAR
Charlie Young, CEO, ERA Franchise Systems, LLC, Parsippany, New Jersey
Margaret Kelly, CEO, RE/MAX, Denver, Colorado
Helen Hanna Casey, President, Howard Hanna Real Estate, Pittsburgh, Pennsylvania
Virginia Cook: Much has been written about the effects of the American Recovery and Reinvestment Act of 2009, also known as the Stimulus Package-specifically, the tax credit for first-time home buyers-and its impact not only on the real estate industry, but on the nation’s economy in general. As we speak, NAR and REALTORS® nationwide are working with the government to craft new programs and innovative strategies for luring new buyers into the market in the hope that their timely jump into real estate will stimulate our financial system. But is the tax credit doing the job as the President and the Legislature intended? Here we discuss the issue-and what may need to happen next-with three savvy industry veterans. Charlie, is the stimulus package living up to its hype? Is it having a significant impact?
Charlie Young: Well, it’s certainly having an impact on the intended segment of the market. First-time buyers in many regions account for more than 50% of current home sales, which means added activity and opportunity for sellers as well-particularly at the lower price points.
Margaret Kelly: That’s true, and we are all doing everything we can to keep momentum going in that segment. But increased activity doesn’t necessarily mean recovery. In many cases, we are getting distressed properties off the market-and that’s a good first step. But we can’t skim along the bottom forever. We won’t make real progress in the market until we find a way to provide some stimulus in the step-up market.
Helen Hanna Casey: An $8,000 tax credit doesn’t mean much to buyers unless they believe that their jobs are secure. One thing that helps is a job protection program, like the ones some car makers are promoting. Our program provides $1,500 a month for up to six months in the event they lose their job. In order to really move forward, people need to feel confident that the economy is stabilizing and their paycheck will still be there once they are homeowners.
CY: Good point. And if we’re making a wish list, we’d like to see mortgage rates stay under 5%. To really be effective and to impact the higher-end market, we’d like to see the tax credit increase from $8,000 to $15,000. We’d like to see it extended to all buyers, not just first-timers, and extended through 2010 instead of just through Dec. 1 of this year.
HHC: The only danger with extending the cut-off date is you lose that feeling of urgency-that feeling that, “I’d better get going before that tax credit goes away.”
MK: I agree with Charlie that a tax credit for all buyers would help. So would reasonable rates for jumbo loans. That would go a long way toward helping sellers move up. And we need to promote short sales and speed up the process so that sellers whose homes have lost value can manage to stay out of foreclosure and buy another home.
VC: NAR is actively evaluating a variety of federal legislative options that would provide an extension of the First-Time Homebuyer Tax Credit. In addition, through its Right Tools, Right Now initiative, NAR offers a variety of resources free of charge or at cost, including the “Save Now With the Homebuyers Tax Credit” brochure and a “Field Guide to Short Sales.” Visit www.realtor.org for more information.
The Power Broker Roundtable is brought to you by the National Association of REALTORS® and Virginia Cook, NAR’s Special Liaison for Large Firm Relations. Watch for this column each month, where we address broker issues, concerns and milestones.