The housing stimulus package was discussed, argued over, and lobbied about for months, but on July 31, 2008 it was signed into law. As one of the most important federal housing policies in our history, the stimulus package encompasses the new perspectives on and reforms for the GSEs, the current crisis we’re dealing with in relation to foreclosures and credit in general, careful revisions to improve LIHTC regulations, bonding capacity, the creation of a national housing trust fund, etc.

The housing stimulus awards first time home buyers with a tax credit in the amount of $7,500 as a result of buying a new home. New home purchases made between April 9, 2008 and July 1, 2009. For the purposes of the tax credit a new home buyer is someone who has not owned a home in the previous 3 years. While the tax credit is not the only item included in the stimulus package now in effect, it is a very central item that has been given a lot of emphasis. Housing industry experts in particular note that the tax credit specifically could be just what is needed to initiate the flurry of home purchases that is needed to stimulate the market.

Those who oppose the bill point at the elevation of the national debt. They point at the guarantee given to two mortgage giants, Fannie Mae and Freddie Mac. They discuss the fact that these two mortgage giants are private companies with publicly traded stock. One of the main criticisms of the package is the inclusion of this guarantee that the government will provide monetary aid to the two companies as necessary. Critics argue that this is providing the opportunity for private profits without provide risk and loss. They argue that the risk and loss has become the responsibility of the general public. They note the estimated $25 billion that is to be spread out over the next two years in the federal budget and shouldered by the tax paying public.

Prominent supporters of the bill include the NAHB (National Association of Home Builders). The National Assoc. of Home Builders fully supported the package and sees it as the stimulus the housing industry needs to pick itself up after the recent explosion resulting in the current recovery period. They see it as the perfect confidence builder that will give home buyers the push they need to purchase now.

When the current state of the market is considered (astronomically high numbers of foreclosures) the stimulus package becomes even more obviously appropriate. For example, at the end of March 2008 there were in excess of 210,000 residential properties listed as foreclosures in California. As a result of the stimulus package, California will receive $365MM direct funding as well as leverage over $780MM through additional grants. This will lead to an additional 6,500 new jobs and $10 billion in property taxes returned.

New home builders seem to be unanimous in their support of the new bill. Anthony Montalbano, Owner of Montalbano Homes, stated, “The bill is a necessary measure. It’s not only aiding the housing industry. Due to the housing industry’s fundamental nature, we’re talking about aiding the economy as a whole through this opportunity to correct the problems created by the recent explosion that swept through the nation’s real estate.”

Everyone has an opinion when it comes to new legislation, but one thing that is obvious is this: first time home buyers have a fabulous opportunity. Until June of 2009, first time home buyers get to have an extra reason to make that purchase they’ve been thinking about. The tax credit is very easily understood, does not come with a lot of strings attached, and is available for a large chunk of time. Smart home buyers will take advantage of all that is offers.