The U.S. government has spent billions of dollars to boost housing transactions since the collapse of the housing market in 2008. The reasons being, the housing industry represents a large part of the U.S. economy, and by boosting housing transactions, economic sustainability and preservation of the housing industry is promoted. Among these government efforts to boost housing transactions are several large legislative acts that implement forms of housing assistance, tax credits, and mortgage industry financial aid.
• The Housing Economic Recovery Act of 2008
The Housing and Economic Recovery Act of 2008 was among the first major efforts to directly boost housing transactions and provide federal financial accommodation to the industry. Among other things, this law established the HOPE for Homeowners Program that was aimed at refinancing mortgages of distressed homeowners, and it also intended to help the mortgage market recover economically.
• Emergency Economic Stabilization Act of 2008
Within the Emergency Economic Stabilization Act of 2008 was the originating legislation for the Troubled Asset Relief Program (TARP) that was considered a bailout of banks whose solvency became challenged by the decline of investments in the housing market. By purchasing these assets from banks, the government in affect helped promote the sustainability of these banks and their capacity to continue housing transactions.
• The American Recovery and Reinvestment Act of 2009
According to the National Association of Realtors, the home buyer tax credit program was directed toward housing market assistance through the American Recovery and Reinvestment Act of 2009. This credit was a government effort to help boost housing transactions. To illustrate, by providing tax incentives that could either be deducted from down payments or increase earned income homeownership was theoretically made more affordable for more than had the credit not been implemented.
• Worker, Homeownership and Business Assistance Act of 2009
This Internal Revenue Service (IRS) claims the Worker, Homeownership and Business Assistance Act of 2009 extended the home buyer tax credit made possible by the American Recovery and Reinvestment Act. Although this tax credit expired in the spring of 2010, the affect is conjectured to have positively impacted home sales during the first quarter of 2010.
According to the Bureau of Economic Analysis, in 2009 the real estate industry accounted for 13 percent of the U.S. Economy. However, in terms of national consumer spending, the real estate industry accounts for a large part of consumer’s incomes. For example, when consumers stop working via unemployment they spend less on their homes causing a decline in real estate market values.
The executive branch of the government has proposed that its efforts to assist the housing market have been effective. Citing lower mortgage rates, and the outpacing of mortgage aid from the rate of foreclosures, the White house is trying to demonstrate it has done something, however whether or not it was enough to prevent the housing market from collapsing further if not allow it to sustain itself may depend on the future success of programs such as the making home affordable program.
Sources: (Date of record, September 16, 2010)
1. http://bit.ly/bto4dx (U.S. Department of Housing and Urban Development)
2. http://bit.ly/9tb63A (Bureau of Economic Analysis)
3. http://bit.ly/bto4dx (White House)
4. http://bit.ly/ExCdq (Internal Revenue Service)