U.S. stimulus plan may give home builders a lift

Posted Feb 7th 2009 2:40PM by Douglas McIntyre
Filed under: Housing, Recession

One of the programs which may come with the new economic stimulus package is a big tax credit for people who buy new homes. It would help potential buyers across almost every income class, which is not what was being contemplated a few days ago. According to Bloomberg, "By replacing a $7,500 tax credit for first-time homebuyers earning less than $150,000 with a $15,000 break for all income groups as part of the economic stimulus package, senators effectively are encouraging purchases by higher-income households with a reduced risk of default."

Last week, Moody's said it was reviewing debt ratings on four home builders, including Beazer (NYSE: BZH) and Hovnanian (NYSE: HOV), for downgrades. That did not do the shareholder in the companies any favors.

The Moody's announcement came before news of a larger tax credit for home buyers hit the market. Some of the details of the program may not be available until early next week. If analysts see the government package as a quick way to put a floor under falling home prices, stocks in firms like Beazer will rally big.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Tags: Beazer, BZH, home builders, home buyers, HOV, Hovnanian, inthenews, recession, tax credits

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Reader Comments (Page 1 of 1)

2-07-2009 @ 7:20PM

cdsilks said...

Put a moratorium on all new home construction until some of this inventory we have is gone!

2-08-2009 @ 3:18PM

TEXAN said...

Yeah...like we NEED MORE NEW HOUSES!!! Get a grip...we have too MANY houses that are all overpriced to the market. So why stimulate the builders that made the profits BUILDING the bubble????? How about helping the home OWNER first.

Trash finance, partisan politics, inept President, crooked Congress...greedy public....what else??

2-09-2009 @ 1:13PM

Iridium said...

Until the do something about the legal extortion that is a bank mortage we will never get out of this mess.

6% a year for 30 years is extortion. There is no other word for it.

We need mortage rates of 2.5%. I am sure the banks can make due with $60,000 worth of repaid interest on a $100k loan. To make people pay back $250k for borrowing $100k is insane.