BOSTON, MA - The Massachusetts housing industry called on Congress today to address the housing crisis that is at the root of the nation's recession. Finley Perry, former president of the Home Builders Association of Massachusetts and former president of F. H. Perry, Builder, Inc.; Gary Ruping, president of Ruping Companies; and Jeff Rhuda, business development manager of Symes Associates, urged Congress to enact bold measures that will stimulate the housing market and, in turn, revive the local, state and national economies.
"Housing is central to our economy and is an engine of production that can lead us out of the recession," said Perry. "But it is crucial for Congress to enact a major stimulus package to stop the decline in home values, stem the tide of foreclosures, stabilize financial markets and re-ignite consumer demand." To get the Massachusetts economy moving again, the housing industry is urging Congress to support enhancements to the home buyer tax credit and provide below-market, 30-year fixed-rate mortgages for home purchases.
Specifically, the legislation should include: A 10 percent tax credit for all qualified home buyers capped at 3.5 percent of FHA, Freddie Mac or Fannie Mae loan limits (equaling $10,000 to $22,000 depending on geographic market). All primary home purchases through December 31, 2009, would be eligible. Repayment would be required only if the home was sold within three years. And the credit would be available at closing, making it easier for buyers to use it as a downpayment; A below-market, 30-year fixed-rate mortgage for home purchases. The second component of the stimulus plan would provide qualified home buyers with 30-year fixed-rate mortgages at 2.99 percent interest on contracts closed until June 30, 2009 and 3.99 percent interest on closings between June 30 and December 31, 2009; and Continued measures to reduce foreclosures and keep people in their homes.
The housing industry representatives cited a similar plan with both a tax credit and a mortgage rate subsidy that was enacted in 1975 when the nation was also in the midst of a recession. That successful stimulus plan jump-started the depressed economy, and the effects continued in communities across the country long after the measure expired.
Jeff Rhuda is the business development manager for Symes Associates in Beverly, Mass. Symes builds residential single-family and multifamily projects and condominiums in Massachusetts, Maine and New Hampshire. "We've seen our business decline by 45 percent, from about 120 sales a year to 42 this year," explained Rhuda. "We subcontract to a lot of people, and the impact on them is just torturous. For instance, a plumber who works for us went from 35 employees to two. Here in Massachusetts, the foreclosures are like a big drain plug pulled out from the market, taking the whole market down with it."
Gary Ruping, president of Ruping Companies, based in Bedford, said, "We decided to shutter our operations for probably six months at least, and will be installing infrastructure for the next few months. My own staff is now two people at this point. A $7,500 loan to home buyers has not done anything to improve our market. But a much more meaningful tax credit along with a subsidized interest rate will help to move people off the sidelines. As a multifamily builder, I've asked people why they're still renting, and they say they're afraid of the market. That's what's keeping them on the sidelines."
"When the housing industry is in a crisis, the entire community is affected," Perry noted. "Retailers, manufacturers, service providers and even the local government are affected. Most important, local residents suffer."
"Three million home building-related jobs across the country have been lost as a result of the slowdown in housing production, which represents $145 billion in lost wages and $4.9 billion in lost purchases," said David Crowe, chief economist of the National Association of Home Builders in Washington, D.C. "Deterioration in these jobs has now spilled over into virtually all sectors of the U.S. job market and the economies of states like Massachusetts."
In Massachusetts, housing values are down by 7.5% compared to the first quarter of 2007, while the unemployment rate has risen to 5.5%. "We are leaving no stone unturned in our efforts to convince Congress to quickly enact a robust housing stimulus program. There's no question that stopping the decline in home values and restoring demand for housing is the fastest and most effective way of reviving the economy," Perry said.
The housing leaders in Massachusetts are part of a new coalition called Fix Housing First, consisting of more than 600 organizations, home building companies and manufacturers advocating for this major stimulus package to stem the decline in home values, stabilize financial markets and re-ignite consumer demand. To learn more about Fix Housing First, go to www.fixhousingfirst.com.
Source: NAHB.org