Even as the automaker CEOs slink back to Detroit to mull over how to explain their demand for $25 billion, the country’s homebuilders are asking for 10 times that amount right now.
They want generous new tax credit for home buyers and for the government to artificially lower mortgage rates to goose up sales. Total cost: $250 billion.
Builder lobbyists are hitting the newspapers with full-page ads asking for voters to support the deal.
"The basic asset that is underlying all the financial problems that we're experiencing is highly unstable, and it's causing an ongoing hemorrhaging in the financial system," David Ledford of the National Association of Homebuilders tells The Wall Street Journal. "It's starting to snowball."
The builders want a tax credit equal to 10 percent of the home's value, maxing out at $22,000. That’s triple the $7,500 credit Congress already gave buyers earlier this year. In that previous offer, though, the money had to be repaid.
Builders also mortgage rates to fall to 3 percent from the current 6.2 percent for loans made during the first half of the year and to 4 percent for loans in the second half.
The National Association of Realtors figures each 1 percent drop would mean between 500,000 and 800,000 home sales. The homebuilders calculate the cost of this part of the plan at $143 billion.
“Housing is at the center of this crisis," Ara Hovnanian, chairman and CEO of K. Hovnanian Homes, told Bloomberg TV this week.
"A lot of focus has been on foreclosures. But that is not going to solve the problem. There is a problem of supply and demand. Supply will be out of balance until we can stimulate demand."
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