CONGRESS STRIKES STIMULUS DEAL - Is It Too Watered Down to Impact Housing Market?
$789 BILLION COMPROMISE PROPOSAL STILL NEEDS FINAL PASSAGE, APPROVAL!
Income tax credits of up to $800 for millions of Americans. Extended Unemployment Benefits, with a higher limit. Tax Credits for Small Businesses and Students. Billions of dollars toward Infrastructure Improvement - roads, bridges, water-treatment plants, broadband Internet, schools . . . more!
If you read through the hundreds of pages of President Obama's Economic Stimulus Bill, just approved by a Conference Committee of the U.S. House and Senate, that's what you'll find! (See today's Wall Street Journal summary by reporters Greg Hitt and Jonathan Weisman).
But what about the housing market?
A Senate proposal to offer a first-time home buyer credit of $15,000 to those who buy a home though August 31st, 2009 has been pared down to the original $7,500 House number, although it could be as high as $8,000 in the final bill. Unlike currently-in-place legislation, this credit does not have to repaid. (Under legislation passed last year in the Bush Administration's Housing Relief Plan, the credit would have to be repaid by the recipient in 15 equal annual installments of $500 each, or in a balance lump sum if the purchased home was sold earlier than 15 years.)
The question, however, remains - would even the larger, $15,000 tax credit be enough to ignite a housing market rebound given the weak economy, and high levels of unemployment, continued higher job losses, and still-staggering levels of home inventory available for sale?
Likely, no - not by itself, anyway!
But perhaps this new Stimulus Program, which could be signed by President Obama within the coming few days, subject to final approval by both houses of Congress, is a necessary first step. It's what is needed to spur confidence, instill hope, and restart the sluggish engine called the U.S. Economy.
Entrepreneurs, as well as those in the Real Estate Business, know that attitude and perception go a long way to begin solving a crisis. But attitude can't go it alone - you need tangible help as well. Perhaps, in a large way, this package provides the ignition key.
From Noam N. Levey, in the Chicago Tribune Washington Bureau, a laser-beam summary of Key Stimulus Package Provisions -
- Those making less than $75,000 each year ($150,000 for couples) would get a $400 tax credit for individuals, $800 for married couples. The credit would be phased out for those earning more. No credit for those individuals earning more than $100,000, or couples whose incomes exceed $200,000). Also, the old Alternative Minimum Tax, would could add to the tax burden of an additional 24 Million with middle income this year, has been adjusted to reduce this potential incremental tax.
- Unemployed workers would see their weekly benefit check jump by about $25 (currently, the average weekly benefit across the U.S. is $200). Benefits would now last 46 weeks, up from the current 26 weeks in IL and many other states. In areas of high unemployment, benefits could last as long as 59 weeks.
- Those who lost their job would receive federal assistance to help them pay their health insurance. That assistance would cover 60% of the full health insurance premium for nine months to workers earning less than $125,000 a year ($250,000 for couples).
- Many college students would receive a $2,500 tuition tax credit. Those eligible for federal Pell college grants will see a $400 increase in the maximum grant amount - to $5,250.
- Food Stamp Benefits would increase by 13.6% Those who rely on Supplemental Social Security Income would receive a one-time $250 check.
- In addition, there are billions of additional dollars in assistance to poor families, as well as monetary assistance to states.
All of this - enough to begin to make a difference? Let's see!
DEAN MOSS & DEAN'S TEAM CHICAGO
