WASHINGTON, D.C. — Drawing on more than three decades of experience in the real estate industry, U.S. Sen. Johnny Isakson, R-Ga., introduced legislation Thursday to jump-start housing demand and to boost the economy by expanding the homebuyer tax credit passed by Congress last year.
“Unfortunately, home prices and property values continue to decline across the country as foreclosures flood the market. Americans are hesitant to buy homes and existing home inventory is nearing an all-time high,” Isakson said. “Our economic crisis started with housing, and our economy will continue to suffer unless we do something now to immediately fix this problem. We must create targeted incentives that will encourage Americans to buy homes again.”
Last year, Isakson introduced legislation to specifically target those homes that were causing the unprecedented increase in housing inventory by offering tax credits to individuals purchasing a foreclosed home or a home where foreclosure is pending.
In April 2008, the Senate passed legislation to stimulate the nation’s declining housing market that included Isakson’s proposal.
However, the final version of the legislation that was signed into law only included a tax credit for first-time homebuyers that must be repaid over a 15-year period.
The legislation introduced by Isakson would expand that tax credit to include all purchasers and would eliminate the current requirement that it be repaid. Repayment of the tax credit would only be required if the home is sold within three years.
Specifically, Isakson’s Fix Housing First Homebuyer Tax Credit legislation would also enhance the existing homebuyer tax credit by:
• Extending the eligibility period for the credit to Dec. 31, 2009;
• Increasing the credit amount to 10 percent of the home price capped at 3.5 percent of FHA loan limits (geographically dependent) – ranging between approximately $10,000 and $22,000;
• “Monetizing” the credit so it is available at time of closing; and
• Allowing the credit to be used in conjunction with mortgages financed by state or local bonds.
Isakson has pushed hard for a non-repayable tax credit for homebuyers because he knows that it will work. In the mid-1970s, America faced a similar housing crisis when a period of easy credit and loose underwriting flooded the market with new construction. Interest rates rose, the economy slowed and America was left with a three-year supply of vacant homes. Congress responded by passing a $2,000 tax credit for anyone purchasing a new home for their principal residence.
Isakson believes the results were clear and swift as home values stabilized, housing inventory dropped and the market recovered.
Isakson spent more than three decades in the real estate business, beginning his business career in 1967 when he opened the first Cobb County office of a small, family-owned real estate business, Northside Realty.
Isakson later served as president of Northside for 20 years, presiding over the company’s growth into the largest independent residential real estate brokerage company in the Southeast and one of the largest in America.