National Association of Realtors Rescue Plan Proposal for Real Estate
Directors for the National Association Realtors (N.A.R.) formally agree on a real estate stimulus proposal.
The proposal calls on congress to use a portion of the $700 billion dollar bailout package to provide a temporary $7,500 first-time home buyer tax credit that does not have to be repaid. In addition, they advised that the fed, should temporarily buy-down mortgage rates to 4.5 percent or less.
NAR, CEO Dale Stinton, said the proposal would cost an estimated $100 billion per year and recommended that the temporary relief remain in place for two years.
Stinton said NAR arrived at the 4.5 percent or lower interest-rate buy-down level as “a result of some surveys and focus groups and talking to some brokers around the country,” and the research indicates that a buying down interest rates to 3 percent to 4.5 percent would get the market rolling again.
“We think in a couple years things will come back to where they should be,” Stinton said. “It’s a small price to pay, in my opinion, to stop the hemorrhaging,” he said, as much longer real estate slump could prove far more costly. ”We have to find a bottom to this market, from the real estate point of view and from an economic point of view,” he said.
Realogy Corp., which owns Century 21, Coldwell Banker, ERA and other household franchise names, recommended the idea of government financed interest rate buy downs in October, saying the buy downs would unleash consumer demand for housing.
Buy downs are not a new idea for increasing buyer activity. Buy downs have been used successfully for years as an incentive. To buy down a rate, sellers pay lenders extra points up front to obtain a reduced interest rate for a buyer, often for the first two or three years of a loan.
The NAR plan also stressed that the federal government should permanently increase in FHA, Fannie Mae and Freddie Mac loan limits to $729,750 in high-cost areas. Effect January 1, 2009, the limits are scheduled to roll back to $625,000.
The proposal from the NAR is on target in terms of what is needed to get things moving on Main Street. And hopefully, when Congress is back in session, they will seriously heed the advise of the real estate community before more damage is done to homeowners.
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Tags: Buyer Incentives, nar, realtors, Stimulus Package