News From Chicago
Having attended the Fall NAHB Board meeting last week, the mood of industry appears to provide some glimpse of optimism.
Some items of note from economists and NAHB staff:
- A long, slow recovery is now forecasted. Demand appears to be stabilizing and is improving, although slowly. The often mentioned theme is - "We are through the worst, but the pain is not over yet" . . .
- The $8,000 home buyer credit has generated nearly 200,000 sales to-date represented by 120,000 first-time and 80,000 move-up sales. What are the chances for an extension? It appears no one is willing to handicap the chances although recent signs are indications some form of extension is probable. There are numerous bills in the House and Senate to either maintain or expand the credit. NAHB is currently doing an extensive job of lobbying Congress. Some feel the "cost" of heath care reform will have some effect on the fate of the credit.
- There is stronger optimism that the NOL provision will be expanded from 2 to possibly 5 years with no or some limitations. This provision has strong support from several industries and would, as currently proposed, be available for losses incurred in 2008 and 2009.
- It is not expected the Fed will tighten rates until the end of 2011. Long-term mortgage rates are expected to remain low in the near and intermediate term.
- Multi-family will continue to struggle until the end of 2010.
- The collapse of the financial markets is no longer imminent.
- Currently there are 270,000 new homes in inventory. In normal times, 300,000 would be expected. Beginning in 2010, there will be a need for 1.8 million housing starts.
- The lending and appraisal environment will continue to be an issue for the intermediate term.
- The Chinese drywall crisis is now affecting homes in 23 states. Any health issues and the number of homes affected are still to be determined.
- NAHB is not sure what position to take on the health care issue other than to resist mandatory coverage, especially for small builders.
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