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.