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This blog is the voice of the Bay Area's home building community. It is a forum for discussion of housing-related news and issues pertinent to the region's 7.2 million residents. All comments are welcome. Salty Ballot Fight
The Redwood City City Council this week adopted a resolution opposing a local ballot measure that would make it next to impossible to build homes, schools, hospitals, churches or anything else on land defined as “open space.” Measure W has been placed on the November ballot by Save the Bay, a crusading environmental outfit, and Friends of Redwood City, a NIMBY community group. Perhaps the most cynical, anti-democratic aspect of the initiative is that, while it requires a mere majority vote for passage, it would require two-thirds of Redwood City voters to approve projects proposed for putative open space land. The target of the Save the Bay cynics and the anti-democratic Friends of Redwood City is 1,433 acres of land owned by Cargill Salt. Cargill is partnering with DMB Associates, a member of the Home Builders Association of Northern California, on a plan for homes and commercial development on a portion of the salt lands. Save the Bay and Friends of Redwood City oppose any development whatsoever on even one of the 1,433 acres Cargill owns. They believe that Cargill’s entire property should be converted to wetlands. Save the Bay is currently soliciting donations for its Measure W campaign, urging supporters to join them in efforts to thwart greedy Cargill, to block evil DMB from developing “an area larger than Golden Gate Park.” That begs the question: If the enviros believe it is so vital that the Cargill salt lands be converted to wetlands, if they believe Cargill’s 1,433 acres are as valuable as Golden Gate Park, why don’t they just ask Redwood City voters to buy it from Cargill? Because they know Redwood City residents don’t feel so strongly about the salt lands that they’re willing to tax themselves to pay for the property – open space be damned. More Collateral Damage
Everyone is well aware of the hardship of homeowners facing foreclosure. Everyone knows about the travails of banks and lenders saddled with non-performing home loans. And mostly everyone recognizes that home builders are struggling to survive the worst housing market downturn since the Great Depression. But what few folks fully appreciate is the tremendous toll the housing recession has had on businesses and industries not directly tied to the buying, selling or ownership of homes – like magazine publishing. Indeed, Hachette Filipacchi Media U.S., publisher of such magazines as Elle, Woman’s Day and Car and Driver, just announced that it is shutting down Home magazine with its upcoming October issue. “The current economic environment is difficult,” explained HFR President and CEO Jack Kliger. “The mid-market home sector has been especially hard hit.” Kliger’s observations are corroborated by Publishers Information Bureau, which recently reported that Home magazine suffered a whopping 47 percent decline in ad pages in the second quarter. And Home is not the only “shelter” publication to fall upon hard times. The Wall Street Journal notes that, in the last year, Conde Nast Publications has pulled the plug on House & Garden magazine and Martha Stewart Living Omnimedia has ceased publication of Blueprint. This is quite a negative turnaround for shelter publications. Between 2002 and 2007, the number of titles increased by 57 percent, according to the National Directory of Magazines. This year, the number of titles actually will decrease. So it’s not just homeowners, and banks and lenders, and home builders that have been hurt by the housing recession. The pain also is being felt by magazine publishers and other business enterprises whose fortunes are indirectly dependent on the health of the housing sector. The Denver Dems
The party of Obama is in the Mile-High City this week for its quadrennial convention. Most of those who follow the proceedings are most interested in what the keynote speakers have to say each evening, including Candidate Obama’s wife, rival Hillary Clinton, running mate Joe Biden and, of course, the presumptive presidential nominee himself. I’m not like most convention observers. I’m not really interested in hearing all the jibber jabber on prime time television. I’m far more interested in the off-camera deliberations on the Democrat Party platform. Having perused the latest draft, I have to say that I am underwhelmed by the section pertaining to housing. The draft platform states the obvious – that “the housing crisis has been devastating for many Americans.” It also panders, as usual, that “minorities have been hit particularly hard.” To address the worst housing downturn since the Great Depression, the Mile-High Democrats offer rather lame prescriptions. “We will work to reform bankruptcy laws to restore balance between lender and homeowner rights,” they promise. “We will crack down on fraudulent lenders and brokers,” they vow. But it’s not because of defective bankruptcy laws and fraudulent lenders and brokers that America finds itself in a housing crisis. It’s because the federal government was far too slow to recognize the looming crisis when it first reared itself, and far, far too slow to do something about it. I believe the housing downturn will work itself out at this point – with little thanks to Washington. But I’d also like to believe that our nation’s leaders have learned the painful lesson from this current downturn, and that they will never let it happen again in my lifetime. That’s why I wanted to see some language in the Democratic Party Platform that reaffirms the importance of homeownership, which acknowledges the central role that home building plays in this nation’s economic prosperity. It so happens that the home building industry was in a recession when John. F. Kennedy stumped for the presidency back in 1960. It is of concern to not just the housing industry, he said, “it is also of concern to every American who wants a decent home” or “who wants his country to grow in strength and prosperity.” I’d like to see a similar pronouncement, these 48 years later, from the party of Obama. Less is More
George Hauser has done the next to impossible. He has built market-rate condominiums in downtown San Francisco affordably priced from $275,000 to the low $300,000s. “It’s hard to find anything priced at this point in this neighborhood,” Hauser, a home builder and architect, told the San Francisco Business Times. “People looking at purchasing here are doing so because they want to be in the middle of things.” The trade-off for buying an affordably-priced unit at Hauser’s Yerba Buena Cubix, for being in the middle of things, is that condos are the smallest in the city, ranging in size from 280 square feet to 350 square feet.” The Business Times cleverly describes them as the residential equivalent of a Smart car. Indeed, the Cubix might very well be the apotheosis of what many Bay area environmentalists consider “smart growth.” It’s an urban infill development, with 98-units squeezed onto a 6,600-square foot site that previously was occupied by a one-story commercial building. Hauser’s “micro-units,” which went on the market earlier this month, and which have yielded two sales contracts so far, are not for every prospective home buyer, probably not for most home buyers. But it very well may appeal to an underserved niche in the San Francisco housing market – singles with modest incomes seeking affordable market-rate housing, however tiny the units, as opposed to government-controlled inclusionary housing and all the restrictions that come with ownership of such units. Silver Lining
It’s hard to see anything good in the housing market downturn, but there is at least one positive development – housing affordability has improved throughout much of California, including here in the Bay Area. In a report released this week, the California Association of Realtors estimate that 48 percent of California households were able to afford an entry-level home during the second quarter of this year. That’s double the level from a year ago. CAR defines a starter home as one priced at 85 percent of an area’s median, according to the San Francisco Chronicle. That works to $329,120 for the state, which requires a minimum income of $62,870 (assuming an adjustable rate mortgage starting at 5.69 percent and a 10 percent down payment). As the Bay Area remains the state’s least affordable housing market, the minimum income required to purchase a starter home, estimated at $528,130, is $11,210. Yet, while starter home price is higher in this region, while minimum required income also is higher, the percentage of Bay Area households that could afford that entry-level home rose to 32 percent in the second quarter this year from 18 percent a year earlier. If, somehow, we can get less Draconian lending standards along with vastly improved housing affordability, the long awaited housing rebound will occur sooner, rather than later. Proof of Life
“Bay Area home sales show life,” reads the surprisingly positive headline on the front page of today’s Contra Costa Times. The accompanying news story reports monthly figures from MDA DataQuick, the La Jolla-based real estate tracking service, indicating that July home sales here in the Bay Area increased on a year-over-year level for the first time since 2005. Joe Brown, President of Coldwell Banker Residential Brokerage, East Bay, tells the Times, “The number of sales you have from this report, that’s a good indication that we are cleaning out this inventory.” However, DataQuick itself says that the latest sales figures for the Bay Area are not as positive as they appear. “So much of today’s market is driven by distress,” explains DataQuick President John Walsh. “We know one-third of the Bay Area's resales in July were homes fresh off foreclosure. Who knows how many more involved a desperate seller and a lender who accepted a short sale.” Indeed, because of the distressed sales Walsh speaks about, the median home sale-price here in the region fell to $470,000 in July. That’s a nearly 30 percent year-over-over year decline, according to DataQuick, and the lowest median since March 2005. Yet, such a shakeout is necessary to bring about the long-awaited turnaround in the Bay Area housing market. As Walsh points out, “Many would be sellers wait for a healthier market and many would-be buyers, especially those eyeing costlier coastal homes, wait for signs of a market bottom or for the return of more favorable financing. Help on the Way
I got a call yesterday from a reporter with the East Bay Business Times. He wanted my take on the latest report from the state Employment Development Department, which indicates that construction jobs have declined 9 percent over the past year. Much of that decline is attributable to the housing slump, I acknowledged, while adding that I am optimistic residential construction will pick up in 2009. Not the least because of recent enactment of the American Housing Rescue and Foreclosure Prevention Act of 2008. The new law will do much to shrink the historically high number of vacant homes, which has deflated home values and discouraged new home starts. Most important, the law offers a $7,500 tax credit for first-time home buyers. It not only is a boon to newbies who purchased a home after April 8, 2008 and before July 1, 2009, it also “will help provide an enormous boost to the housing industry,” as our friends at the National Association of Home Builders see it. The tax credit is like an interest-free loan from the government, to be paid back over 15 years. “Here’s the good part,” The Wall Street Journal explained to its readers. “The credit reduces your tax liability on a dollar-for-dollar basis and can even boost your re3fund. If you owe $10,000 in taxes, you can take the credit and pay just $2,500. Or if you woe $5,000 in taxes and have it paid over the year, you can take the credit and receive all your money back with an additional $2,500. How significant is the credit as a housing stimulus? Well, NAHB notes that 40 percent of all home buyers are first-timers. So a tax credit that benefits first-timers, that motivates them to buy up the new and resale homes already on the market, will ultimately stimulate housing production. It was a home-buyer tax credit that helped the home building industry rise from a deep downturn in the 1970s. The expectation here is that the latest tax credit for first-time home buyers will yield a similar outcome. Tale of Two Markets
I caught CNN’s “Open House” this past weekend. News Anchor Christine Romans, sitting in for Gerri Willis, reported that “a lot of Americans think that their house price is the same or going up when, in fact, that might not be the case.” Roman’s revelation was based on a report this past week from Zillow.com, suggesting that 77 percent of all homes have declined in value over the past year. “This was really surprising to us,” said Zillow Vice President Amy Bohutinsky, a guest on “Open House.” “In fact, it was pretty shocking.” Not to me. And a story in yesterday’s San Francisco Chronicle explains why. Like practically ever other region of the state and of the country, the median Bay Area home price has declined. But that data is skewed by sales of foreclosed properties as well as short sales.”
“Foreclosures and short sales don't really conform to the definition of market value because they are done under duress,” Karen Mann, principal of the East Bay appraisal firm Mann & Associates, told the Chron. "At the same time,” said Mann, who boasts nearly 30 years experience appraising homes, “you have people who are selling homes who just want to move and are not in distress. That creates two price levels within one neighborhood.” Indeed, those selling homes in distress – either banks or homeowners themselves – perceive an unpromising housing market. Meanwhile, those who are not under duress, who have no intention of selling their homes at firesale prices, perceive a more favorable housing market to come. Felony Dumb
If the Boards of Supervisors for the nine Bay Area counties want a lesson in how not to respond to the ongoing housing slump, they need look no further than Tulare County. Because of a precipitous decline in building permits, Tulare finds itself facing a budget shortfall. So, in their questionable wisdom, the county supes this week unanimously agreed to hike building-permit and planning fees. And not only did Tulare’s supes increase existing fees on home building by as much as 10 percent, the Visalia Times-Delta reported, they also approved new building-permit fees covering sewer, drain and gas hook-ups, detached garages, carports and pools. Tulare’s supes are felony dumb. Jacking up building-permit and planning fees in the midst of one the worst housing downturns in memory will only result in home builders seeking even fewer permits. The $400,000 budget shortfall the county is facing will only grow bigger. If Bay Area counties want to see an increase in building permits and the revenue they generate, they should do the complete opposite of Tulare County. Instead of hiking fees, they should cut them – at least temporarily. Counties will earn less from each permit, but will issue a greater number of permits. They will glean more revenues from home builders with a lower fee regime than they otherwise would by maintaining fees where they are or, worst of all, by increasing fees. Zounds! Zillow
Zillow.com, which describes itself as “an online real estate community,” has arguably become the community’s foremost bearer of bad news. Yesterday it issued a rather alarmist, attention-getting press release that was picked up by all the major newspapers and cable news shows. “U.S. Home Values Drop Nearly 10% in Q2,” screamed Zillow, “Leaving Almost One-Third of Homeowners Who Bought in the Past Five Years Underwater on Their Mortgages.” In parts of California, according to Zillow, more than 60 percent of homes sold in the past year were for a loss, while homes sold in foreclosure exceeded 50 percent. Here in the San Francisco-Oakland-Freemont metropolitan statistical area (MSA), Zillow informed, nearly half of all homes sold in the second quarter recorded a loss, while 34.3 percent were foreclosed. Second quarter home prices in our MSA fell 16.7 percent year-over-year, which returned home values here to where they were in first quarter 2004. “The second quarter,” said Dr. Stan Humphries, Zillow’s Vice President of Data and Analytics, “is the sixth consecutive quarter of home value declines and we see little promise of a turnaround in the short-term as the rates of decline have yet to slow and, in fact, actually accelerated in many markets.” Yet, there is a silver lining amid Zillow’s otherwise gloomy housing data. “Although,” it noted, “the significant majority of markets reported year-over-year depreciation this quarter,” 90 percent of those markets, including the San Francisco Bay Area, “returned positive annualized appreciation over the past five years, and every market has shown positive appreciation over the past 10 years.” Too bad Zillow didn’t mention this on the first page of its press release. But, then, the professed online real estate community – which hardly is a friend of the real estate or home building communities – wouldn’t have gotten itself as much ink and air time. School Bullies
The Santa Clara Unified School District Board voted unanimously yesterday to withdraw a measure slated for the November ballot that would have forced home builders to pay a whopping $30,000 a home for every new home built in North San Jose. If passed by the voters, the measure would have all but killed the North San Jose development plan, which will add as many as 32,000 homes and create as many 83,000 jobs. Now, make no mistake, the District Board didn’t suddenly feel magnanimous toward San Jose home builders (who, like builders elsewhere, are struggling to survive the worst housing downturn in more than half a century). Nor did the District Board fear that voters would be unwilling to sock it to home builders, as District Board Vice President Andrew Ratermann assured the San Jose Mercury News ( “There were some people who thought maybe we were compromising because we couldn’t win the election, and that wasn’t the case”). No, the District Board withdrew its ballot measure because it was bought off by San Jose Mayor Chuck Reed, who pledged $75 million to defray the cost of building new schools in North San Jose. The Mayor deserves credit for brokering the compromise, but he really didn’t have much choice if he wanted the North San Jose development plan to move forward. That’s because, in the brave new housing market, a $30,000-a-home school fee (on top of other development fees) would have guaranteed that hardly any of the 32,000 new homes and 83,000 new jobs would materialize any time in the foreseeable future. Cause for Confidence
The National Association of Home Builders/Wells Fargo Housing Market Index is due out this week. I can predict what this monthly barometer of builder confidence will reveal – that builders aren’t especially optimistic about the next six months. Yet, here in the Bay Area, I see signs that the housing market is bending toward recovery. Like the August report by the Mark Company, the San Francisco real estate marketing and research firm, confirming that sales of new condominiums in the city have stabilized during the past several months.
“There is a steady pace of sales and an increase in traffic across the board,” Alan Mark, the firm’s president, told the San Francisco Chronicle. “You definitely see people out there buying.”
Meanwhile, a recent report by DataQuick Information Systems, the La Jolla-based firm, indicates that sales of new homes in San Francisco rose 18.7 percent from June last year to June this year. Of course, San Francisco holds a unique place in the Bay Area housing market. The market dynamics at work in the city are not necessarily at work throughout the entire region. Yet, San Francisco has a halo effect. The closer one gets to the city, the stronger the housing demand. So the data on San Francisco new home sales is good news not just for builders doing business in the city. It’s a harbinger of future sales growth for home builders throughout the region. Land-Use Landmark
It is being called the Golden State’s most significant land-use bill since passage of the California Coastal Act in 1976. And the California Building Industry Association played an instrumental role in thrashing out the compromise legislation. SB 375, authored by Sen. Darrell Steinberg, D-Sacramento, and co-authored by Sen. Denise Ducheny, D-San Diego, is a first-in-the-nation measure to link greenhouse gas reduction goals to regional planning for home building and transportation. The compromise, said a press release by Sen. Steinberg, “marks the first time major environmental organizations, local governments and major homebuilders have agreed on a plan to accommodate California’s future growth.” The environmental community is happy because SB 375 encourages urban infill development, as opposed to suburban greenfield development (which it condemns as “sprawl’). The home building community is happy, said CBIA Chairman Ray Becker – whose company, DMB Associates, is a member of the Home Builders Association of Northern California – because the bill “delivers more certainty in the land-use approval process.” Indeed, SB 375 requires local governments to adopt zoning rules to implement state-required housing elements. That will give home builders a clearer idea of what is required of them before they submit plans. The measure also rewrites parts of state environmental law to make it more difficult for NIMBYs to block new home projects that meet basic density and other requirements laid out in local zoning ordinances. Paul Campos, the HBANC’s Senior Vice President for Governmental Affairs, actually spent several months negotiating on SB 375 on behalf of CBIA’s Major Builders Council. His work, and the work of Ray Becker and other building industry leaders who participated in the lengthy process, will benefit the home building community here in California, here in the Bay Area, for years to come. SF Goes Green
I got a call from a reporter at USA Today. She wanted my take on San Francisco’s new green building code, which Mayor Gavin Newsom signed into law earlier this week. The reporter expected me to lambaste the city’s new green building requirements (which reputedly are the nation’s strictest) and to savage Mayor Newsom for having proposing them. That would fit the narrative she had already decided upon before she interviewed me – that the “evil developers” were reflexively opposed to green building. I informed her that the Home Builders Association of Northern California, whose members produce roughly three-quarters of the Bay Area’s new housing each year, is supportive of green building – including San Francisco’s new green building code. In fact, I told her, an HBANC builder member, Webcor Vice President Phil Williams, actually chaired Mayor Newsom’s Green Building Task Force, which crafted the provisions of the city’s green building law. That includes a provision, sought by the HBANC, endorsing Build it Green’s GreenPoint Rated as the verification system for single-family, low- and mid-rise residential developments within the city. The USA Today reporter didn’t get what she wanted out of me so she found a spokesman from the National Association of Home Builders to say that it “opposes” San Francisco’s green building ordinance because, he told the reporter, compliance is not voluntary and building green is costly to builders. Well, if he were talking about a state other than California, a region other than the Bay Area, a city other than San Francisco, his hard line position might be tenable. But California is leading the nation in green building, the Bay Area is leading the state, and San Francisco is now leading the region. The Bay Area home building community faced a hard choice: To toe the NAHB line on green building or to work cooperatively with San Francisco, Oakland, San Jose and other cities in the region to develop reasonable green building standards. We chose the latter and, I believe, wiser course. Inclusionary on the Ballot
I can’t recall that I’ve ever read a newspaper editorial beseeching voters to reject a ballot initiative three whole months before they actually go to the polls. That is, until this week, when the Morgan Hills Times urged its readers to vote against a measure that would rein in one of the Bay Area’s more Draconian inclusionary housing laws. “There are lots of reasons,” the Times argued, “to oppose” the initiative, which was placed on the ballot by Citizens for a Balanced Community, a group that includes members of the local home building community. Among the reasons listed in the editorial – the measure “would make it difficult or impossible for the city of Morgan Hill to meet its state and federal affordable housing mandates.” And, if the city “does not meet state and federal affordable housing mandates, it might not be eligible for state and federal funds that help make affordable housing projects pencil out.” Both of those supposed “reasons” for opposing the initiative are disingenuous at best, deliberately misleading at worst. First, neither the state nor the federal government imposes enforceable affordable housing mandates on Morgan Hill or any other city. Second, since there are no enforceable mandates, there is little danger that state and federal funds will be lost. But even if the state or the feds told Morgan Hill it had to produce a certain number of affordable units, and that the city’s failure to do so not only would make it ineligible for state and federal funds, but also subject it to fines, why should the burden of compliance be laid at the feet of the city’s home builders? Morgan Hill’s inclusionary housing law, like those of other Bay Area cities, is predicated on the fallacy that market rate builders somehow bear the blame for the dearth of affordable housing. But that makes as much sense as blaming farmers for the fact that so many needful families can’t afford groceries or blaming doctors and hospitals for the fact that poor folks can’t afford health care. Almost everyone agrees that the problems of the underfed and the uninsured should be borne not just by the farming community, not just by the health care community, but by the whole of society. That same principle should also apply to affordable housing. Bottom in Sight
Charles Peabody is no shill for the home building industry. A veteran bank analyst with the independent research firm Portales Partners, he was one of the first to sound the alarm that the credit and mortgage markets were headed for a tumble, actually issuing “sell” ratings on many banks. That is why it is noteworthy that Peabody now says he sees a bottom to California’s protracted housing downturn, which could lead the way to the long-awaited national housing recovery. “Since California constitutes 25 percent of the housing stock in the U.S.,” Peabody wrote, in a recent report, “any stabilization can have a profound impact on national averages.” The bank analyst told Reuters news agency that home sales are rebounding here in the Golden State as an increasing number of renters become owners. That’s because, he explained, in many parts of the state, buying a house makes more financial sense than paying rent. There are other indicators that California’s housing slump is finally abating. The backlog of homes for sale fell to 7.7 months of supply in June from 16.8 months in January. The days a home for sale stayed declined to 49.1 in June from 71.6 in January. Peabody told Reuters that California’s supply of homes for sale not only is well below the national average, it also is nearing the six month’s worth of supply indicative of a balanced market. Ultimately, the bank analyst said, the key to the housing recovery “is to get some stability in the price of homes.” That, he added, “appears to be happening in California.” Sound and Fury
I’ve spent much of the past week reading various editorials and op-ed articles deconstructing the Housing and Economic Recovery Act of 2008, which President Bush signed into law last Wednesday. The prevailing conclusion of the opinionistas is that the American taxpayers have gotten jacked by a provision of the new law that authorizes the Treasury Department to guarantee new debt issued by Fannie Mae and Freddie Mac. “Fannie Mae, Freddie Mac Live to Die Another Day,” sneered a commentary on Bloomberg News. “Congress has been too lenient on Fannie Mae and Freddie Mac,” chided an editorial in the Economist. “Mortgaged to the World,” lamented an essay in the New York Times. It’s a good thing that the opinionistas didn’t get to decide the fate of the housing recovery legislation. Because the federal governments support for Fannie Mae and Freddie Mac, which underwrite nearly half of all mortgages in this country, will prove a boon, and not a burden, the American taxpayers. Indeed, as Rick Newman, Chief Business Correspondent for U.S. News & World Report, recently pointed out, “Many taxpayers are homeowners, too.” So any measure that helps homeowners, like strengthening Fannie and Freddie, also helps taxpayers. Besides, wrote Newman, taking the decidedly contrarian point of view – which I share – “the cost of rescuing Fannie and Freddie is probably a lot less than the cost of doing nothing.” He listed three persuasive reasons. First, the health of the two mortgage giants directly affects home value. “For the housing market to recover,” wrote Newman, “buyers need to materialize and start purchasing a huge inventory of unsold homes, which Fannie and Freddie support.” Second, it’s the wrong time for strict market solutions. “Fannie and Freddie could tough it out in the market, without government help” wrote Newman, “but that would cause deep problems before it solved anything.” Indeed, Fannie and Freddie would be forced to cut back on the number of mortgages they back which would only exacerbate the current lending crisis. Third, the rescue could end up costing very little. Indeed, with the federal backstop, Fannie and Freddie very well will be able to raise enough capital to get out to get out of the danger zone. If that happens, the rescue will turn out to be a huge bargain, Newman reasoned. “It will help restore stability to the housing market with nothing more than congressional ink,” And, I might add, at no cost to taxpayers after all.
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Not a Bailout
One of the biggest fictions circulating about the housing relief legislation President Bush signed into law this week is that it is some sort of “bailout” for home builders. Well nothing could be further from the truth, as the Wall Street Journal points out. The legislation is, at best, “a mixed bag for the new home market,” according to the Journal. On the plus side, it reported, the measure shores up Fannie Mae and Freddie Mac, “which should help restore some confidence in the mortgage market,” while also providing a $7,500 tax credit for first-time home buyers. Both provisions are welcomed by home builders. But, it should be noted, they apply not only to new homes, but also to resale homes. In fact, realtors stand to benefit from the two provisions more than home builders. Meanwhile, another provision of the housing relief bill will be especially deleterious to home builders. It eliminates seller-funded down-payment assistance on mortgages backed by the Federal Housing Administration. As the Journal points out, seller-funded down-payment assistance “has been filling the void left when the subprime-mortgage market all but vanished in 2007.” The business daily cites an analyst who estimates that disallowing such assistance will eliminate as many as one in ten prospective buyers from the new home market. Meanwhile, the bill excluded another important provision sought by home builders. It would have extended the current two-year carrying back on taxes to four years. That would have allowed builders to apply current losses against profits they earned during the housing boom, which would have given them the potential for substantial tax refunds. Richard Dugas, President and CEO of Pulte, captured the sentiments of much of the home building industry in his assessment of the housing relief bill. “We’d love to have more, but we also have to be thankful for what we have.” |
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