| November 2, 2009 |
By Joe Robson
NAHB Chairman and
Jerry Howard
NAHB President and CEO |
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Support is building for key measures that will help housing,
with lots of positive action taking place in Congress and the Administration this past week.
 Just days ago, the Senate began its consideration of legislation to extend unemployment insurance benefits for jobless Americans. Thanks to the hard work of NAHB, our grassroots members and a number of our allies in the Senate, proposals to extend and expand the home buyer tax credit and expand the Net Operating Loss (NOL) carryback provision of the tax code are included in that legislation. These proposals are due to the bipartisan efforts of Senate Finance Committee Chairman Max Baucus (D-MT) and Senators Johnny Isakson (R-GA), Chris Dodd (D-CT), Olympia Snowe (R-ME), Lamar Alexander (R-TN) and Joe Lieberman (I-CT), and Senate Leaders Harry Reid (D-NV) and Mitch McConnell (R-KY).
Specifics are still somewhat fluid, and obviously, this is not a done deal yet. But as of press time for this report, here is what we know is in the housing proposals:
Home Buyer Tax Credit Provisions
- The $8,000 tax credit would be extended until April 30th for first-time home buyers;
- A new $6,500 tax credit would be created for move-up buyers for the same period;
- Both categories of buyers would have until June 30th to close on the home after
signing a contract prior to the April 30 deadline;
- Both categories of home buyers would have new, higher income limits of $125,000
for individuals and $225,000 for couples;
- Move-up buyers must have been residing in their primary residence for 5 consecutive
years out of the last 8 in order to qualify for the credit; and
- Homes over the purchase price of $800,000 do not qualify.
NOL Carryback
- Five year carryback for NOLs in either 2008 OR 2009, not both;
- Years 1-4 allow for 100% use of NOLs; year 5 is limited to 50% of a company’s
taxable income in that year;
- There would be no size limitation for the company or other cap on revenues;
- Unused NOLs in year 5 are still eligible for the 20 year carry forward;
- Small businesses (less than $15 million in gross receipts) would be able
to claim a 5-year carryback for 2008 losses (under ARRA) and for 2009 losses
according to the proposal; and
- There would be no limitation for NOLs claimed against AMT tax liability in carryback years.
We anticipate that the Senate will pass this legislation over the coming week and send it to the House for its approval immediately thereafter. With any luck, a bill should be on the President's desk for his expected signature by the end of the week.
Administration Endorsement
Some very encouraging news came on Oct. 29, when the Obama Administration officially called on Congress to approve several key housing measures, including extension of the home buyer tax credit. In an official statement, Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan said, "We welcome efforts taken by Congress to extend the First Time Homebuyers Tax Credit for a limited period. This credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide." The Secretaries also called on Congress to take two other important actions to assist home buyers – extend higher conforming loan limits for mortgages and work with the Administration to identify a financing source for the Housing Trust Fund.
Stay tuned to NAHB reports for the latest developments on this crucial housing legislation that could mark a major victory for both builders and buyers. We hope to have more good news for you soon!
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Putting the best minds in housing finance to work
 on determining how this country's housing-related government sponsored enterprises (GSEs) should be structured in the post-recession era was the purpose of a landmark NAHB Webcast event that was moderated by NAHB Chairman Joe Robson last week. Participants included such respected industry experts as Lewis Ranieri, chairman of Ranieri Partners LLC; Michael Berman, president and CEO of CWCapital and chairman-elect of the Mortgage Bankers Association; Peter Wallison of the American Enterprise Institute; Geoff Bacino, former director of the Federal Housing Finance Board who is now president of Bacino and Associates; and former House Financial Services Committee Chairman Michael Oxley, who is now with the law firm of Baker Hostetler. In debates over various potential GSE reform methods, the only unanimous conclusion among these expert panelists was that the status quo cannot be maintained.
"The question is how to make the transition from the current structure to the future structure without undermining ongoing financial rescue efforts and throwing the housing finance system into even more chaos," said Joe, in starting the discussion. "There are many possibilities, ranging from extremes such as complete privatization or operation as government agencies, to a number of public-private versions between those extremes." NAHB sought to host this special Webcast because, as Joe explained, "We want to go to the table with sound ideas that will produce the best possible long-term outcome for home buyers and home builders." For comprehensive coverage of this event, including the input of our star panelists, read the Nov. 2 evening edition of Nation's Building News Online. Send questions to: MondayMorningQuestions@nahb.com.
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A critical loss of momentum in new-home sales this September
 was attributed to the impending expiration of the first-time buyer tax credit as well as continuing problems in the jobs market. The latest data, released by the U.S. Commerce Department on Oct. 28, indicated that sales of new homes fell 3.6% to a seasonally adjusted annual rate of 402,000 units this September. For the most part, September was already too late for buyers to sign a deal for a new home and have it go through to completion prior to the end of November when the credit expires. NAHB pointed to the data as the latest evidence that government action to expand and enhance the tax credit is absolutely necessary. "The fact that sales are now heading downward just shows how important the tax credit has been for stimulating buyer demand up to this point, and how essential it is for Congress to move quickly on legislation that would extend the credit's expiration date and expand its eligibility to more buyers," said NAHB Chairman Joe Robson in our official reaction statement. The Commerce Department also reported that the inventory of new homes on the market continued downward for a 29th consecutive month in September, falling to 251,000 units. This is the lowest inventory number since November 1982. Read NAHB's press release for more, or see the government's official report online.
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A petition that seeks to revise lead paint standards
 is spurring strong NAHB opposition because such changes could potentially impact over 200,000 contractors and property managers, confuse and deflate an already strained industry sector, and delay compliance with the Lead Renovation, Repair and Painting Rule (LRRP). At time when the EPA is struggling to implement its new training and certification requirements for remodelers working in homes where there is lead-based paint, "changes to the lead-dust hazard standard will only serve to confound the purpose of the rule, perplex both the public and the regulated community and potentially put more children at risk," we said in official comments submitted to the agency. The petition in question is the work of advocacy groups including the National Center for Healthy Housing, the Alliance for Healthy Homes and the Sierra Club; they are asking the agency to reduce the current lead-dust hazard standard and create a new definition for lead-based paint. The petitioners also want to regulate homes with paint composed of 0.06% lead by weight – more than eight times more stringent than the current definition of 0.5%.
At this point, EPA has agreed with the petition and also to work with HUD on these changes. While revising the lead-dust standard and redefining lead-based paint would in effect send the EPA back to the drawing board, we pointed out that remodelers and contractors are at this time attending training courses to become certified renovators and dust sampling technicians using the new cleaning methods and other requirements – which in turn, are already about to be revised themselves. "If the lead-dust standard were revised, any contractors already certified would no longer be properly trained in the work practices outlined in the LRRP," NAHB said in official comments submitted to the agency. And "because the EPA is already struggling to have sufficient accredited training firms available, making such a change at this point makes little sense." Send questions on this item to MondayMorningQuestions@nahb.com.
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Welcome news on polar bear protections
 came from the U.S. Department of the Interior on Oct. 22 when it proposed to designate 200,000 square miles of Alaskan territory as critical habitat rather than considering regulating parts of the rest of the country. At a recent press conference, federal officials noted that only land use activities occurring within polar areas of Alaska would be subject to Endangered Species Act requirements, a position that reaffirms the stance previously taken by the Bush Administration. This is in spite of the fact that environmental groups had viewed the government's 2008 decision to list the polar bear as endangered as an opportunity to use ESA requirements – including the designation of critical habitat – to more comprehensively regulate land use activities that presumably cause greenhouse gas emissions. Had the government chosen to pursue this course, significant restrictions could have been placed on land use in areas far from the bear's natural habitat. As it stands, 93% of the proposed designated polar bear habitat in Alaska is made up of coastal sea ice. The Interior Department does not expect that designation to have a signficant impact on oil and gas drilling in the area because the polar bear is already protected by existing laws, including the Marine Mammal Act. Read more on this subject in the Oct. 26 edition of Nation's Building News Online, or send questions to: MondayMorningQuestions@nahb.com.
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Remodeling activity boosts local economies,
 and NAHB has the numbers to prove it. As NAHB Senior Economist Elliot Eisenberg explained in a recent HBA presentation that was excerpted in last week's Nation's Building News, on average, every $100 million spent on addition and alteration projects creates 690 full-time jobs (480 construction jobs, 110 wholesale and retail trade jobs and 70 jobs in business and professional services) and generates $36.7 million in local income and $3.2 million in local taxes. The "ripple effect" of all this economic activity adds even more to the positive impact. Remember, the ripple occurs because the local economy has increased by almost $40 million in taxes and local income ($36.7 million in local income and $3.2 million in local taxes) because of the additions and alterations that were performed. Once earned, this nearly $40 million gets spent, much of it in the local economy. And, in the process, this creates another 320 jobs — 70 in the wholesale and retail trade; 60 in local government; 30 in restaurants, bars and other eating establishments; 30 in healthcare, education and social services; and many other jobs in other sectors — not to mention $1.7 million more in taxes and another $17.5 million of local income.
Combined, the direct and ripple phases from that amount of additions and alterations would result in 1,010 jobs, $4.9 million in local taxes and $54.2 million in local income. Another way of putting it, says Elliot, is that every 10 jobs created doing building additions and alteration work leads to almost five more jobs through the ripple phase, and every $10 of tax revenue that's initially generated creates another $5.40 due to ripple effects. Elliot also points out that, while additions and alterations always result in a temporary boost to the local economy, a permanent boost is also likely. That's because, when additions and alterations result in a permanent addition to a structure, its taxable value rises and the flow of property taxes to all local governments improves. Read more here, or send questions on this item to MondayMorningQuestions@nahb.com.
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The NAHB Women's Council has a new name
 that better reflects its members and its mission. Henceforward, this important council will be referred to as NAHB's Professional Women in Building. When the group was first established back in 1955, it was primarily an auxiliary for builders' wives. But today, the council is made up entirely of women who are building industry professionals – including builders, architects and engineers, as well as industry-related technical, marketing and sales professionals. Accordingly, the new council name was officially approved during the recent NAHB Board of Directors meeting in Chicago. While state and local HBAs do not have to adopt the national name change for their councils, several in California, North Carolina and Oklahoma have been using the Professional Women In Building name for the last few years. Nationally and locally, the councils support their members through networking and educational opportunities, legislative awareness and outreach, and professional and personal development. Please visit www.nahb.org/womenschannel for more information, or send questions on this subject to MondayMorningQuestions@nahb.com.
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Don't miss these two upcoming educational events:
Thursday, Nov. 12 - 2:00 p.m. EST
50+ Housing: Are You Prepared For a Recovery?" - This webinar will teach you about marketing tools that will help you position your company to take advantage of the 50+ market's eventual recovery. The hour-long event is free to NAHB 50+ Housing Council members. There is a $69 fee for other NAHB members and a $100 fee for non-NAHB members. Click here for details and to register, or contact Jeff Jenkins, 800-368-5242, x8292.
Thursday, Dec. 10 - 10:00 a.m. EST
Customer Service Course - For the first time ever, the NAHB University of Housing is offering a webcast of its day-long Customer Service educational seminar. Participants can attend the course in person or watch it during the live webcast by registering at www.nahb.org/Customer. Onsite registration fees are $195 for NAHB members, $245 for non-members; webcast fees are $245 for members, $345 for non-members. Several HBAs will be showing the live webcast, as well; contact your local to find out if they will have this offering and what their fee schedule will be. Get more information and register online, or contact Maria Nande, 800-368-5242, x8435.
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