Housing Bubble
Home Builders reaffirm support for economic growth package
March 10, 2003
The National Association of Home Builders (NAHB) reaffirmed
its support for the President's economic growth package following a
report released today by the Mortgage Bankers Association of America
claiming that the plan will provide a significant short-term boost
to economic growth and may actually have a positive effect on the Low
Income Housing Tax Credit (LIHTC) program.
"It seems that
both the Mortgage Bankers Association and NAHB agree that prompt implementation
of the President's growth package would provide a welcome stimulus
to the economy and housing market," Jerry Howard, executive vice president
and CEO of NAHB, said, noting that the MBA study concluded that the
economic plan would add 1 million new jobs to the economy by the end
of next year and boost Gross Domestic Product by an additional 0.5
percent this year and 0.9 percent in 2004.
Howard added
that the MBA report underscores the heightened need to take a thoughtful
approach to whether the President's proposal to eliminate the double
taxation of corporate earnings would adversely affect the Low Income
Housing Tax Credit (LIHTC) program, which is the premier program for
affordable housing production.
Ernst & Young released
a study last week that concluded there will be a 35 percent reduction
in the number of Low Income Housing Tax Credit units built if the dividend
plan is enacted as proposed. By contrast, the MBA report states: "Based
on all of the various and sometimes offsetting factors at work, it
appears unlikely that any negative price changes resulting directly
from the administration's plan would be significant. Indeed, it can
be argued that a failure to pass the administration's growth plan would
negatively impact LIHTC prices."
"Reports from two respected
organizations that reach vastly different conclusions on the White
House dividend proposal and its impact on the Low Income Housing Tax
Credit just go to show what we've been saying all along -- that we
should not, and can't, rush to judgment," said Howard. "The President's
proposal is too important to our future economic well-being and involves
a series of very complex issues. We need to take a calm, thoughtful,
rational approach to avoid unintended consequences that could be harmful
to the housing industry."
"And the administration seems
to also share this view," he added. "In a meeting last week with Pam
Olson, assistant secretary for tax policy at the Treasury Department,
Ms. Olson told us, 'We don't want to do anything to damage the Low
Income Housing Tax Credit.'"
As an organization that represents
all segments of the housing sector, NAHB looks forward to meeting with
top administration officials and members of Congress in the near future
to produce the best possible economic stimulus bill for the housing
industry, said Howard.
Source: National Association of Home Builders
