Weichert in panic mode

From NJBIZ:

New Attempt at a Housing Turnaround

Morris Plains-based home seller Weichert, Realtors is pushing for congressional support for a tax-credit plan it hopes will drive more people to buy homes, thereby reinvigorating both the housing market and the economy. But while some real estate and economic experts say the proposed measure could help to increase home sales, the plan would be only one of many components needed to turn around the deeply troubled housing industry.

The real estate company’s proposal, which the firm announced two weeks ago and would provide a tax credit for homebuyers beginning this year, is the latest in a series of measures that are designed to pull the housing market out of a deepening slump. In December, President Bush announced a plan to allow some borrowers of adjustable rate mortgages to freeze their current interest rates for five years.

Weichert’s plan differs from the other proposals because it is aimed at prospective homebuyers rather than existing homeowners, says Jace Botti, the company’s head of residential sales. “Most of the stimulus plans have focused on providing support for at-risk homeowners that may be having trouble keeping up with their adjustable mortgages,” she says. “We’re looking for a stimulus to get [prospective homebuyers] who currently may be on the fence to make a move.”

The tax-credit plan is currently just “a conceptual idea,” according to Dominick Prevete, Weichert’s regional vice president of sales, who says the company is in the early stages of trying to find a sponsor in Congress to support the measure. The company’s president and founder, James Weichert, met last week with members of the National Association of Realtors (NAR), which has a big lobbying unit, to discuss the proposal. “One of the things we’re working on with the National Association of Realtors is what’s going to have the biggest impact on the most number of potential homebuyers,” says Prevete.

The firm’s plan “is worth exploring,” says Mary Trupo, NAR’s public-issues director. But the association does not intend to take action until the federal government comes out with its economic stimulus package. Whether NAR decides to endorse Weichert’s proposal will be based on what the package includes, Trupo says.

Weichert is proposing its measure at a time when the housing crisis is threatening the stability of the economy as a whole. “The bursting of the housing bubble has put the country on the precipice of recession,” says economist Joseph Seneca at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University in New Brunswick. Seneca says declining house prices and tight credit standards, together with rising energy costs, may cause consumer spending, which represents about 70 percent of the economy, to decline in the first or second quarter of this year. Consumer spending has not fallen on a quarter-by-quarter basis since 1991, he says.

“We think that something has to be done immediately,” says Weichert’s Prevete. He says the housing market has a big impact on the economy because of the numerous sectors that are tied to housing, such as furniture manufacturers and retailers, decorators and contractors. “When someone purchases a house, a lot of other people go to work, so the impact can be significant,” he says.

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4 Responses to Weichert in panic mode

  1. Pat says:

    Hmmm. What would get me to buy a house right now?

    HOW ABOUT LOWERING THE D@MN PRICE, NIMROD?

    Last year, I hypothesized that elective renters (sponges) would be as happy as clownfish by the Fall, and by Spring, would be considered Turtles…slow to make a decision. It’s here, officially.

    Here’s what would make me budge. Show me a nice home, that reflects the fact that my husband and I have top credit, have been working for 20+ years earning good pay, and have a big ole Chunky Pam type of downpayment.

    Do not tell me that to keep my mortgage payment in line with my current rent, I have to buy a double wide ten feet from the PA turnpike in East Jabip, PA.

  2. Al says:

    I will take a tax credit equial to the 10% of the house price :)

    Anyways sleasiness and special interests lobbying are amazing. how about preferrential treatment of One group – home buyers – because of realtors lobby???

    Why people who do not buy a house treated not the same way??

    It will be interesting.

    But 10% (of house price) tax credit for the eyar you buy a house might make me buy.

    The only problem – the moment they willl be close to passing this bill in congress – all house prices will go up by 10%….

  3. DB says:

    Al — I still think it would take a year for prices to rise, even with stimulus like that — too much inventory. Especially since us elective renters would jump on the best of that inventory on day 1. :-)

  4. The prices of homes are way out of line in NJ. The market needs a major correction and the sellers have not adjusted their prices. Until the first time buyers get in the market, we will have a standstill. Why does a home new in 2008 cost on average $500,000 that was only $200,000 only 7 years ago. Do you not think the bubble exists in New Jersey. Add on the $12000 plus taxes, and these are just a few of the problems. Prices need to come down another 20% before anyone should look at buying a home. I see shacks going for $300,000.

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