Home Builders Call For Housing Stimulus Package to Revive Economy, Increase Housing Opportunities for All Americans

With the economy at a critical turning point, the National Association of Home Builders is urging Congress to support a housing stimulus package along with comprehensive tax relief legislation proposed by President Bush.

Historically, housing tax incentives have helped stimulate housing activity, employment and the U.S. economy, which is why NAHB believes that a timely stimulus to home buying and housing production will act as a shot in the arm to help combat slowing economic growth and increase housing opportunities. NAHB leaders recently met with congressional leaders on both sides of the political aisle to discuss these issues.

NAHB will work with Congress and the Bush Administration to include two housing stimulus proposals in the tax package. The first proposal calls for a temporary, one-year tax credit of up to $6,500 for first-time home buyers for the purchase of a new or existing home.

The second proposal would help provide downpayment assistance to first-time home buyers. It would provide a temporary, one-year change in the definition of a qualified investment for a tax-deferred retirement account to allow the home buyer, their parent or grandparent to transfer up to $10,000 tax free from an IRA or 401(k) to invest in a downpayment for a first-time home purchase. The principal amount would be returned to the retirement account upon the sale of the home or at the time designated in the agreement. Under current law, any withdrawals for this purpose are taxed at the person’s marginal tax rate.

While there is an urgent need to act quickly on a tax stimulus package to combat slowing economic growth, the nation is also grappling with an acute shortage of affordable housing, including the 5.3 million Americans who spend more than half their incomes on housing or still live in substandard units.

New programs to preserve the existing stock of affordable housing and produce more affordable rental units were discussed during a recent meeting between NAHB leaders and Mel Martinez, Secretary of the Department of Housing and Urban Development. Increasing the cap on FHA-insured multifamily loans and developing a new production program would make a real difference in the lives of America’s working families by supporting and encouraging private development of affordable multifamily housing, particularly in high-cost urban areas where it is needed most. The cap on FHA-insured multifamily loans has not been raised since 1992.

NAHB is also urging Congress to enact legislation to reform brownfields federal liability laws so that thousands of brownfields sites in urban markets can be cleaned up and used for new housing and mixed-use development. There are about 500,000 brownfields, typically old industrial sites with some degree of contamination, in the nation. Concerns about future federal liability related to “brownfields” are a major barrier to building in these areas. In his Feb. 27 address to a joint session of Congress, President Bush said that “accelerating the cleanup of toxic brownfields” is a significant step in the right direction in rebuilding the nation’s urban markets.

But NAHB is concerned that a brownfields reform bill making its way through Congress will fall seriously short in addressing this problem because it does not include federal protections for the clean-up of petroleum contamination. If liability protection is not extended to oil, nearly half of brownfields sites nationwide that have some petroleum contamination may remain unproductive eyesores for years to come.

From combating slowing economic growth to removing regulatory barriers to building affordable housing and providing tax incentives for homeownership, the federal government has a responsibility to ensure that every American has safe, decent affordable housing. The National Association of Home Builders is committed to working with the 107th Congress, the new Administration and coalitions of industry organizations on these critical issues to benefit all Americans.