Housing Bubble

Builders testify on solutions to remove affordable housing barriers

June 12, 2003

The nation’s home builders today called on Congress to take several steps to remove barriers to the production of affordable housing and to expand homeownership opportunities for America’s working families.

"Enactment of a number of legislative proposals pending in Congress would significantly address many obstacles to homeownership," Bobby Rayburn, first vice president of the National Association of Home Builders (NAHB) and a home builder from Jackson, Miss., told the Senate Banking, Housing and Urban Affairs Committee. "These measures include a homeownership tax credit to support the production of affordable homes in underserved areas; a refundable first-time home buyers’ tax credit that can help cover downpayment costs; and more federal grants to states for downpayment assistance for lower-income home buyers. NAHB is also pursuing changes in federal regulations that will increase the incentives of lenders to address homeownership gaps and reduce the costs of federal regulations."

Rayburn added that NAHB fully supports President Bush and his "Blueprint for the American Dream" initiative to increase homeownership opportunities for minority families. "To further this endeavor, NAHB has committed to promote homeownership education, improve minority access to credit and work with lawmakers at all levels of government to identify and fix policies and bureaucratic hurdles that make it difficult to build affordable housing or that add to the cost of such housing."

Across the country, NAHB is actively working to facilitate affordable housing partnerships involving state and local home builders associations. The most recent initiative involves a partnership with Nueva Esperanza, a major Hispanic faith-based community development corporation, to build affordable housing in several U.S. cities. The first of these is taking place in Orlando, where NAHB, Nueva Esperanza and Esperanza USA are working to achieve the affordable housing production goals of the Hispanic Capacity Project in mid-Florida.

To increase housing opportunities during National Homeownership Month, NAHB is urging Congress to act on the following legislation:

• Homeownership tax credit bills S. 198 and S. 875 in the Senate and HR. 839 in the House. The legislation would help bridge the gap between the cost of developing affordable housing and the price that buyers can afford to pay for a home in many lower-income neighborhoods. The credit would stimulate construction of 50,000 new or rehabilitated homes each year and create 120,000 new jobs annually.
• "The First-Time Homebuyers’ Tax Credit Act of 2003," S. 1175, would create a refundable tax credit of $3,000 for single taxpayers and a $6,000 credit for married couples buying their first home. It has been estimated that the program would help as many as 17 million people become home owners over the next seven years.
• "The Mortgage Insurance Fairness Act," S. 846, and companion House bill H.R. 1336 would make premiums paid for FHA and private mortgage insurance tax deductible. This would aid lower and moderate income home buyers, who are the most frequent users of the insurance.
• "The American Dream Downpayment Initiative," introduced in the Senate as S. 811 and in the House as H.R. 1276, would provide $200 million to assist lower-income families to achieve homeownership. The program is expected to assist 40,000 households annually.

To spur construction of new affordable housing, Rayburn called on the Federal Housing Administration to insure single-family construction loans. This would help establish a secondary market for these loans to attract new lenders and investors to the housing production credit market. "The development of such a market will lower the cost of construction credit, help attract more capital to underserved areas and help home builders avoid the type of severe credit crunch that occurred in the early 1990s," he said.

Source: National Association of Home Builders