Don't Abandon the LIHTC, Warns NAHB Chief Economist
Members of the U.S. Senate Banking Committee were warned that while an improving job market should help boost home sales and housing production later this year, the ongoing problems that builders are facing in acquiring construction credit threatens to significantly slow the fragile housing recovery. National Association of Home Builders (NAHB) Chief Economist David Crowe urged lawmakers to take the necessary steps to restore the health of the housing industry.
Among his recommendations were to preserve the mortgage interest rate deduction and other housing tax rules, such as the capital gain exclusion, the real estate tax deduction, and the low-income housing tax credit (LIHTC). If eliminated or weakened, these well-established housing policies would result in wealth losses for home owners, lower home values, rising foreclosures, a diminished local tax base for many communities, and in the case of the LIHTC, an abandonment of a successful policy that facilitates the production of affordable housing, he noted.
Crowe pointed to several factors that will affect conditions in the market. He observed that multifamily housing starts, which have experienced great volatility in recent months, are projected to increase 21 percent in 2011 and 40 percent in 2012, rising to 210,000 units in the fourth quarter of next year, which is still 38 percent below NAHB’s estimate of long-term sustainable growth.