NAHB Lays Off Staff, Trims Budget
Not surprisingly, the National Association of Home Builders is being forced to retrench its staffing and budget as it faces a huge drop in membership -- the Washington-based lobbying group said earlier this week that it had cut $11.5 million from its 2009 operating budget and eliminated 52 positions, as a result of cost-cutting measures. "The stark financial realities confronting our association and industry cannot be ignored, said Jerry Howard, NAHB CEO and president. "Projected income from NAHB's two principal sources -- membership and trade shows -- will be down significantly in 2009." Obviously, the number of residential builders, particularly among the more local ranks, has been decimated by the housing crisis. Howard said that the cuts were a proactive measure to "help position the association to maintain its advocacy leadership." The group has been among the largest lobbying entities on Capitol Hill in recent years, thanks to the vast run-up in residential construction and housing, and along with the National Association of Realtors and Mortgage Bankers Association helped form a triumverate that represented one of the most powerful lobbying forces inside the Beltway. The NAHB would not comment on whether the budget cuts would eat into the group's lobbying efforts next year. The group began pushing an agenda it's calling "Fix Housing First" earlier this week, billed by the NAHB as "one of the largest coalitions of housing advocates ever assembled in the United States," and part of a lobbying effort to see more federal funds directed towards a quickly dwindling membership base. The NAHB says its coalition has the support of more than 600 organizations -- likely the members of the trade orgainzation itself. The NAHB is lobbying for a broad extension to a recently-passed home buyer tax credit, and for federal intervention into mortgage markets to provide below-market 30-year fixed-rate mortgages for home purchases -- both items that HousingWire has reported on in the past few weeks. The group wants to see the first-time homebuyer tax credit recently passed by Congress bumped up from $7,500 to as much as $22,000, and to see Congress eliminate the requirement that the credit be repaid (which leaves us, by the way, to wonder why it should be called a "credit" under such a scenario, rather than a "handout"). The NAHB is also pushing a more aggressive mortgage rate proposal than the 4.5 percent mortgage plan suggested by the NAR and allegedly under considering by the U.S. Treasury. Instead, the builders say they want 30-year fixed-rate mortgages at 2.99 percent on contracts closed until June 30, 2009, and 3.99 percent on closings between June 30 and Dec. 31, 2009. The question, of course, is whether attempting to prop up home prices -- the net effect of the NAHB proposals -- is the best solution to the problems facing the nation's housing market. Earlier this week, Dean Baker, co-director for economic think-tank the Center for Economic and Policy Research, suggested that allowing home prices to correct to long-term trend levels as quickly as possible was a much more viable solution. "A rapid return to trend levels is significant for homeowners in that it gives them a sense of how their home equity figures into their real wealth and how they have to adjust their consumption and saving decisions," said Baker. "This is even more important for the huge cohort of baby boomers rapidly approaching retirement who may find that they have little or no wealth to support them in retirement beyond Social Security." Baker beleives that prices are still hugely out of line with trend levels in many of the nation's so-called bubble markets, and called for Fannie Mae (FNM) and Freddie Mac (FRE) to temporarily restrict the buying of mortgages in these areas. This would lead to fewer loans being issued in these markets and prices would quickly adjust to normal levels, he said. Write to Paul Jackson at firstname.lastname@example.org. Disclosure: The author held no positions in any of the stocks mentioned when this story was published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.