The Housing and Economic Recovery Act of 2008

Ready for some good news? Some came to us this past month in the form of the Housing and Economic Recovery Act of 2008, Congress's answer to the recent correction in the housing and mortgage markets. Centerpiece of this 694 pages of legislation is a $7,500 tax credit for first-time home buyers, to be in effect until next July, a move that in itself should stimulate the market. Along with the tax credit, the measure takes steps to improve mortgage liquidity, help strapped people refinance their home loans, and expand the supply of workforce housing. The stimulus package has been criticized by some as a thinly veiled and too-expensive bailout of the industry in general and Fannie Mae and Freddie Mac in particular. A few pundits have even accused Congress of "nationalizing" the housing and mortgage industries. But we believe this legislation is what the industry needs right now, and is just what it purports to be: a stimulus for buyers and better regulation for lenders and borrowers. We at the Rhode Island Builders Association have always said that the housing market drives the state's economy. I think the current economic situation in Rhode Island bitterly proves the point. The Housing and Economic Recovery Act demonstrates that the federal government knows this is true on the national level and is willing put its weight behind a housing recovery. Just how much the measure will help the economy remains to be seen, but I believe it is the proverbial step in the right direction. I'm reminded of what University of Rhode Island economist Leonard Lardaro says in his interview in this issue of The Rhode Island Builder Report: that deficits and economic problems can have a bright side because they have a way of forcing governments to adopt more discipline in budgeting and spending. I think that the Housing and Economic Recovery Act is an example of this. Sure, it isn't cheap. But wouldn't it be far more expensive to let the industry drift at a time of such low public confidence and media negativity? Speaking of the media, I hope they will cover this measure fully and fairly. And I'd like to see them cover the good effects I'm sure it will have, both nationally and in Rhode Island. Let's bring back some confidence! Thomas McNulty is the president of the Rhode Island Builders Assn., East Providence and is president of E.A. McNulty Real Estate, Cumberland.