Home buyers will help U.S. recover

Given the severity of this Great Recession, it’s encouraging when a mixed bag of reports can actually add up to relatively good news for our well-hammered economy.

Looking ahead, Dennis P. Lockhart, president of the Federal Reserve Bank of Atlanta, drew a picture of tempered optimism during a speech last week at the University of South Alabama. “Unquestionably, the economy is improving,” Lockhart said in prepared remarks. He quickly added that, “There are pluses and minuses, positives and negatives. It’s not a uniform picture.”

That about sums it up. The next step is to translate the numbers into an outlook for those of us closely watching our pocketbooks and casting worried glances at the growing federal deficit and the bills fluttering into our mailboxes.

Long story short: The recovery, if it holds, won’t be a rocket ride back to the buy-now, pay-later prosperity we enjoyed for years. Most likely, the U.S. is in for months, if not a year or more, of slow growth.

Even so, there’s some encouraging news out there. The unemployment rate for both the Atlanta area and Georgia fell slightly in August. And Georgia’s rate of increase in new claims for unemployment benefits slowed in August, another good sign. Job losses nationally continued to slow in September also.

Let’s not send marching bands down Main streets in celebration yet, though. In Lockhart’s words, “Optimism is warranted but should be tempered by awareness that this is an economy substantially buttressed by a large number of temporary government support programs.”

Will the economy be healthy enough to stand on its own or will it resume a downward course, weighted once more by problems that had been temporarily salved by government largesse? Time will answer that question.

More certain is that economists and politicians will argue for years about what helped and what didn’t as Washington threw hundreds of billions of taxpayer and Federal Reserve dollars at a downturn that threatened to become another Great Depression.

One highly visible program was the first-time home buyer tax credit. The $8,000 credit was the result of legislative sausage-making that began with a broader incentive championed by U.S. Sen. Johnny Isakson (R-Ga.). A former Realtor, Isakson rightly believed that a tax credit would lure would-be home buyers back into real estate’s marketplace.

The National Association of Realtors estimates about 350,000 buyers would not have bought homes this year without the credit, which is set to expire Nov. 30. Stapling more “sold” signs on the vast catalog of unsold homes that dot the region and the rest of the United States is a good thing, as long as we don’t fall back into the quick-money pattern of backing too-risky borrowers. And we doubt that’ll happen anytime soon.

Metro Atlanta home sale prices have risen slightly for two months in a row, according to the S&P Case-Shiller Index. The homebuyer credit, no doubt, played a role.

Congress should extend the deadline and broaden this tax credit. That shouldn’t be too much of a stretch, given the mind-boggling billions Washington has already shoveled toward sundry incentive programs in recent months.

The American yearning to own four walls and a roof deserves commonsense support, such as this tax benefit.

Given the newfound prudence in lending that has resulted from the near-meltdown in mortgage financing markets, we’re also sure the American Dream has been downsized to a more-realistic and sustainable vision of what home should look like. That’s to the good as a new generation comes to know the fiscal thriftiness their forebears learned the hard way during the real Great Depression.

Expanding the tax credit is an equitable thing to do. First-time home buyers are not the only buyers, even during this national hunkering-down. Growing regions such as Atlanta draw newcomers who want a tax-sheltered place to live. Others buy homes to accommodate growing families, for school and commuting preferences, etc.

Extending the tax credit to accommodate these buyers will give needed support to the slowly recovering housing market as we head into the normal cold-season sales slowdown. Acting decisively and responsibly to help spur housing will help us claw our way toward recovery, given this sector’s influence on our economy.

In coming months, the economy will work its way through fits and starts, ups and downs. Thankfully, though, we seem finally to be headed mostly in the right direction. That’s welcome news for us all.


Andre Jackson,
for the Editorial Board