Local home builder calls for higher tax credit, lower rates

The $7,500 tax credit given to first-time home buyers isn't enough to compensate for deteriorating consumer confidence, a local home-building executive and incoming president of the Southern Nevada Home Builders Association said Thursday.

The tax credit needs to be increased to 10 percent of the home's value, in the range of $10,000 to $22,000, and it should only have to be paid back if the home is sold within three years, Bill Hoover said during a conference call with local home builders and a national economist.

The president of Las Vegas-based Pageantry Homes also called for permanent home financing rates in the 3 percent to 4 percent range and for enhanced foreclosure measures to keep people in their homes, though it would not be a permanent program.

"We're calling on Congress to act," Hoover said. "This is not a bailout for builders. From my perspective, we need a stimulus package for the consumers."

America is going through the worst economic times since the Great Depression, he said. Some 3 million residential construction jobs have been lost and the deterioration has spread to other job sectors, like the people who work at Home Depot and Target, Hoover said.

Nick Galatio, president of Desert Winds Homes, said he's had to "bite the bullet" this year, reducing his staff to nine people and building about 55 homes, compared with 262 last year.

"The big thing we need to look at is how this bailout is handled," he said. "The bank is getting bailout money and the bank comes after me for guaranteed payment. That's double-dipping. How is that affecting my ability to do business? I'm looking very closely at the situation I've got going."

Housing obviously played a key part in the most serious economic setback of the post-World War II era, economist David Seiders of the National Association of Home Builders said. It started in December 2007 and helped put the entire economy in the red zone, he said.

The Federal Reserve is targeting its rate down to zero, which is "kind of scary in some ways," Seiders said.

"Some people think this can bring the housing market back and I think it's highly unlikely the Fed can do that," he said. "That leaves it with Congress and the new administration."

The Fed's action over the last few days is unprecedented in form and volume, Amstar Homes President David McEntire said.

"We need to change consumer confidence in the market and there's two ways to do that," he said. "One is job assurance. If we drop the price to zero, there won't be any lines of buyers without job assurance. The other thing is we've got to have a good down payment program."

Amstar sold 13 homes this year -- about 5 percent of his normal market share -- all at a loss, McEntire said. He's had to put more cash into development to boost loan-to-value ratio, which has put Amstar on the brink of bankruptcy.

McEntire said Las Vegas home appraisals are coming in based on short sales and foreclosures, that appraisers are fearful of their jobs when asked to give fair market value. Many of those short sales and foreclosures were the result of criminal activity in the mortgage industry, he said.

It's like a drug dealer's car that was confiscated and sold for $1 at a police auction, McEntire said. That doesn't set the Kelly Blue Book value for the car. The same concept applies to houses, he said.

The housing downturn started with home builders and they're the ones who've suffered through this recession, Dennis Smith of Home Builders Research said.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.