I wish I could have seen the look on CR's face as he wrote this:
"I thought this was from The Onion ... unfortunately it is not.New houses for everybody.'From the NAHB: Legislation Addresses Housing Production Credit Crisis
Legislation introduced yesterday by Reps. Brad Miller (D-N.C.) and original co-sponsors Carolyn Maloney (D-N.Y.) and Joe Baca (D-Calif.) would help alleviate the severe lack of credit for acquisition, development and construction (AD&C) financing that threatens to end the budding housing recovery before it has time to take root, according to the National Association of Home Builders (NAHB).
'We applaud these lawmakers for taking the lead to address the housing production credit crisis that is jeopardizing the housing and economic recovery now under way,' said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich.
H.R. 5409, the Residential Construction Lending Act, would create a new residential construction loan guarantee program within the Department of Treasury to provide loans to builders with viable construction projects. Designed to unfreeze credit for small home building firms, the measure would expand the flow of credit to residential builders on competitive terms'".
9 comments:
Harriet-
I agree that is crazy. Why in the world would government want to create a ton of new houses. Don't they realize that the problem in the housing market is too much supply!!!!
I thought the problem was a bunch of idiots paying way too much for a house back in 2004-07... I'm fine with more supply so long as it is priced appropriately.
Jeremy-
There are way more houses than are necessary. More supply just means more neighborhoods with abandoned houses, which area a blight on the community and increase crime rates.
If we continue to make houses it will just push off the problem that we have too many houses. It is much better for the economy to struggle with a weak construction market for a couple years than drag it out for decades.
I agree as a buyer it would be nice if there were tons of new houses at cheap prices. Unfortunately there is not that much excess capacity or excess land around here so both are unlikely in this area. New construction would likely be in places that need it the least.
Hb, not having read the bill, I'm speculating, but if there are areas of the country where the demand is there and there are credit worthy builders who are unable due to system problems to get credit, then my reactions are like Jeremy's. A bill designed to fix a financing problem rather than create full employment for builders seems ok.
Ace-
I agree, but I don't think it will mostly be used in places that need construction. Maybe I am wrong and the builders are brilliant and know what markets they should build in and which ones they should let sit, but my guess is they only are worried about making a quick profit rather than a sustainable market (hopefully I am wrong and they learned from their past, but I doubt it).
I also am a little surprised about the comments about banks foreclosing projects where people are paying due to appraisal contingencies. I have read far more that for large projects the banks are using a extend and pretend mentality rather than forcing losses now.
I hope I am just being a pessimist and you and and Jeremy are correct.
This reminds me of that piece in the NYT not too long ago about the builders in Las Vegas.
The builder was saying new places are selling just fine, and that the 1990-2000 vintage homes dont matter because their buyers dont want 10-20 y.o. homes, they want new.
Not sure what to make of that, other than maybe this bill was intended to apply western markets that have a seemingly infinite amount of land and location (apparently) doesnt get much of a premium. Still, it just sounds awfully stupid to me. If thats what they are doing, arent they just replicating detroit, but on an accelerated timetable?
Well, it's actually kinda annoying when areas have perfectly fine houses that go for like $400-$500k and then a builder/investor comes in and decides to tear that house down and build two homes there that are over $1M.
Basically, many that COULD have afforded to live in a location are slowly getting priced out due to many new homes being built that are way too expensive...
I still say new homes being built at market clearing prices is a good thing. It will do more to make homes "affordable" to everyone than any HAMP or whatever other subsidies they come up with just to prop up prices and make homes LESS affordable to new families.
Hi Sehr - Though there may be a couple of missteps, I think that by and large builders try to build to the market. Million dollar homes will be built if there is a market for them. If not, builders will build cheaper homes for cheaper markets. For all the negatives in artifically propping up the market, there are some perceived positives as well. It's all relative.
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