NAR’s 4 Point Economic Stimulus Plan
The National Assocation of Realtors has come up with a 4 point economic stimulus plan. I actually don’t entirely believe it is that comprehensive. I actually buy into the economic incentive plan that Barack Obama has invisioned for the country as it is more comprehensive and makes sense. The following are the 4 points:
1. Make the $7500 first time home buyer credit available to all buyers and eliminate the repayment. (Currently one must pay it back over 15 years)
I believe this one makes sense as it does help many individuals in their first year of purchasing the house. This helps them recoup some of their cost that they would incur in their closing.
2. Make the FHA and GSE loan limits for 2008 permanent.
I believe this is a good idea because having the loan limits as high as possible and keeping the interest rate low is the best thing we can do in this economy. Currently the loan limit on a regular conventional loan & FHA is $625,000 but is supposed to go down beginning January 2009. When this occurs the interest rate charged on those same loans will be higher. Remember the amount for the loan limit is determined by the median home price in that area. In the Washington D.C. region it is the maximum $625,000.
3. Create a federal mortgage interest buy down program to make loans even cheaper for homeowners.
Though I think this is a good idea - this is not the type of economy where bringing very low interest rates will increase purchases. The problem is that the availability of home loans is the issue. We currently have strong scrutiny with home loans that it becomes difficult for most individuals to approve for a loan. The large issue as well is that individuals have very little confidence in the market. I am not sure how much this will actually help the economy.
4. Bar banks from the ability of doing brokerage and management of real estate.
This honesty has nothing to do with the current economy and that is not going to help the economy that we are currently in. This has been a long time issue that realtors have had with banks. They feel that banks pose a threat to the industry as a whole. I actually do not see this threat as they have an entirely different business model.
So out of the 4 points in their economic stimulus plan - I really only believe in 2 of the points. What are you thoughts? What would you add or subtract? Either leave a comment here or email me at psingh@rempower.com
I look forward to seeing you all in a future workshop!
Prabhjit Singh