Home Builders Want Federal Bailout, Too

But critics warn adding to housing supply will only make things worse

By Katherine Thompson, Newser Staff

Posted Nov 24, 2008 12:37 PM CST

(Newser) – Home builders, undeterred by the automakers’ troubles in securing federal aid, are campaigning for a $250 billion stimulus of their own, the Wall Street Journal reports. Saying that the economy can't recover until home prices stop tanking, the builders propose a plan, called “Fix Housing First,” where the feds would underwrite some percentage of new-home costs through tax credits and subsidies.

But not everyone is thrilled with this idea: Economists fear a push toward more building will keep supply and demand out of whack and extend US financial troubles. Others point out that past housing credits have only worked because of a growing economy. With so many people jobless, it’s harder to tempt them to commit to a new mortgage.

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Lennar Corporation is offering big incentives to home buyers looking to buy into their new home developments like this tract in Santa Clarita, Calif. (AP Photo)

The worst housing downturn since the Great Depression is battering homebuilders nationwide, resulting in a sharp industrywide slowdown in new home construction. (AP Photo)

Hillary Rodham Clinton speaks with homebuilder Mike Gansen as she campaigns in Junction City, Oregon Friday, May 16, 2008. Since the primaries, the fortunes of builders have taken a downturn. (AP Photo/Elise Amendola)

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You can offer people all sorts of credits, but if they don't have a job or income I don't know that they're going to take the bait. - Jared Bernstein of the Economic Policy Institute

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Home Builders Want Federal Bailout, Too