On Wednesday, the Senate approved nearly $2 trillion in aid in a government relief package—the biggest in American history—in hopes to offset the economic distress caused by the COVID-19 pandemic. The House has set a Friday voting deadline, but it is expected to pass, then head to the President for final approval.
As a financial buffer for American residents, the package will distribute a direct, one-time payment of $1,200 per taxpayer. There is, however, a threshold of $75,000—those who earn more will begin to see a phase-out of the credit, which disappears entirely for those who earn more than $99,000 (on an individual basis, not per household). Families with children will receive an additional $500 per child.
A concern among real estate agents has been their self-employed, independent contractor status. However, with the help of the National Association of REALTORS®, the package includes a provision that would allow independent contractors to apply for unemployment benefits. Gig-economy workers and freelancers will also be eligible, with payments increased by $600 weekly for four months.
“The National Association of REALTORS® is grateful that the U.S. House and Senate have come together to craft this extensive, bipartisan economic relief bill,” says NAR CEO Bob Goldberg. “Over recent weeks, NAR has worked tirelessly with Congressional leaders on behalf of our members to ensure small business owners, the self-employed and independent contractors have been included in the three relief packages Congress has passed to date. With over 9.5 million jobs in the real estate, rental and leasing industry, and every two home sales generating one job in this country, the real estate industry will represent a key component of our national recovery.”
The bill also includes $350 billion in loans to help small businesses that may be struggling from COVID-19-related closures—covering salary, wages and benefits worth 250 percent of an employer’s monthly payroll, with a max loan of $10 million. NAR helped secure Small Business Administration (BA) 7(a) loan eligibility for independent contractors and those with commission-based income, as well as their inclusion in the forgiveness provision of the plan.
According to the NAR advocacy team, these loans would not require much in terms of up-front certification, providing funding to the SBA to help expedite loans and giving the administration the authority to include more lenders into the SBA loan program, increasing options for businesses.
The bill would also delay due dates for employer payroll taxes.
“All of the payroll taxes of an employer and one-half of the self-employment taxes of a self-employed individual, as well as one-half of the estimated taxes of the individual that arise between the effective date of the act and the end of 2020, would not be due to the Treasury Department until Dec. 31, 2021, with the other half due by Dec. 31, 2022, if passed,” according to the NAR advocacy team.
In addition, the bill includes:
· A tax credit for retaining employees for up to 50 percent of wages paid during the pandemic crisis; only businesses forced to pause operations or who experienced a 50 percent drop in gross receipts from the previous year are eligible.
· A $500 billion pool of taxpayer funds to create loans, loan guarantees or investments to or in businesses, states and municipalities that have been damaged by the crisis
· $17 billion in loans and loan guarantees for “businesses critical to maintaining national security”
· $117 billion into hospitals and veteran healthcare
· Suspension of federal student loan payments until Sept. 30, with no interest accrual
How will the bill impact consumers, the economy and housing market? Here’s what industry experts have to say about the stimulus package:
“The stimulus package is positive news. Job cuts due to the coronavirus are dampening the confidence of consumers. The goal is to reverse that damage quickly and with the help of this package, we will get there.” – Lawrence Yun, Chief Economist, NAR
“Provisions in the stimulus package will help put money in the pockets of consumers who have lost income or are facing increased expenses as a result of COVID-19 disruption through direct payments, as well as increased unemployment benefits. Loans for small businesses and affected industries should help them keep more employees on payrolls and meet other payment obligations despite loss of revenue. These measures will help homeowners and renters better meet their obligations, and prop up consumer spending, which drives roughly two-thirds of the American economy—but this stimulus will likely not be sufficient for everyone to meet all obligations. Fortunately, Fannie and Freddie and private banks have rolled out mortgage forbearance programs for individual owners as well as owners of multifamily properties who agree to suspend evictions. The hard pause and cooperation to fight the spread of COVID-19 is essential. Creativity and cooperation from individuals, corporations and institutions to minimize damage to credit and confidence is a necessary precondition for a quick post-crisis snap-back.” – Danielle Hale, Chief Economist, realtor.com®
“Congress just threw a life preserver to the American worker. Direct cash payments are efficient—they allow a person to choose where the money can be best put to use—and least distortionary; they don’t favor one industry or group over another. In the short run, a quick cash injection will keep mortgage payments flowing and prevent unnecessary downward pressure on home values. Unlike the Great Recession, this crisis need not alter the long-run trajectory for the housing market. In the absence of action, millions of temporarily unemployed renters and homeowners would be facing great financial stress. The steps Congress and the Federal Reserve are taking increase the speed at which the housing market can return to normal.” – Dr. Marci Rossell, Chief Economist, Leading Real Estate Companies of the World®
“The fiscal stimulus package is certainly a positive step. Together with the earlier move to expand unemployment insurance and sick time, as well as the Fed’s support for the credit markets, these policies will help to bolster spending, which is expected to bear the brunt of the virus as consumers stay home and some workers become unemployed. How much of the negative impacts this stimulus will offset remains contingent on the scope and duration of the outbreak. If the U.S. is not able to reign in the coronavirus before the second half of the year, then even this unprecedented stimulus will likely be inadequate. However, if the outbreak is short-lived, this package will provide part of a much-needed financial bridge to a better economic environment. In either case, more actions will likely be necessary given the unprecedented postponement (at best) or loss (at worst) of economic activity.” – Jordan Levine, Deputy Chief Economist, California Association of REALTORS® (C.A.R.)
“The Senate has taken an important step forward to help American families and businesses that have suffered economic hardship stemming from the coronavirus outbreak. This bold, bipartisan economic stimulus package contains key provisions to help small businesses, including many home-building firms, to keep their doors open and meet their payroll requirements. It also provides needed cash infusions to families to help them pay their mortgage or rent during this unprecedented hit to our economy. The House needs to act promptly to pass this bill and get it to the president’s desk for his signature. Given the magnitude of this crisis and its ongoing detrimental effects on the housing sector, further action may be necessary.” – Dean Mon, Chairman, National Association of Home Builders
“The fiscal package will help families that have a bread winner that has been laid off, helping them to remain current on their mortgage or their rent. Shelter is a basic need, and with high housing costs in many parts of the U.S., the cash injection will help families through this unexpected economic turbulence. The package will lessen the blow to the economy and make it well poised for a bounce-back. With mortgage rates at a historic low, housing may be the sector that helps pull the rest of the economy into recovery.” – Frank Nothaft, Chief Economist, CoreLogic
As the coronavirus and its impact on the industry unfold, RISMedia is providing resources and updates. Get the latest.
Liz Dominguez is RISMedia’s senior editor. Email her your real estate news ideas at email@example.com.