Lawmakers propose housing stimulus plan

February 23, 2009 8:43:44 PM PST
Some Illinois lawmakers are teaming up with area home builders in an effort to help prospective buyers close the deal. Lawmakers have unveiled their plan to jump start the housing market. Their thinking is that economy tanked because the housing market soured. Fix that and they believe just about everything else should follow.

Suburban lawmakers are hoping to entice buyers back into the market with a tax credit and at the same time, they're hoping to provide some much needed relief for home builders.

The building boom has gone bust.

In suburb after suburb, we see subdivisions sitting empty, like a lonely house in Wheaton, all by itself on a cul-de-sac that was to be filled with luxury homes by now.

Same story in Naperville.

"In my peak years, I was building 19, 20 homes a year for the past 18 years," said Scott Eckstein. "This year I'll build one unfortunately."

And that translates into 75,000 construction related jobs lost in Illinois over the past year.

Some state lawmakers think -- or make that hope -- they have come up with part of the solution.

"Really give some incentive and some pop to this industry to get people interested in buying homes and building homes again," said Rep. Tom Cross, (R) Oswego.

Lawmakers from the southwest suburbs announced their own housing market stimulus plan on Monday.

For home builders, strapped with paying taxes on empty lots, their plan would be to freeze assessed values until the new homes are completed. For home buyers, they're offering a one percent income tax credit, based on the purchase price, up to $5,000 dollars. Buying a $325,000 dollar home, would put $3,250 back in your pocket.

"I think it should be able to stimulate some activity for buyers but I don't know that it's going to be overwhelmingly enough to turn the tables so to speak," said Phil Brilliant, Chicago Financial Services.

Brilliant, in the mortgage lending business for 25 years, likes the plan but says it alone probably isn't enough. In the city, he says the condo glut is the big concern.

Lenders who just four months ago were requiring only five percent for a down payment are now asking for 25 percent down today, leaving many would-be buyers sitting it out.

You may have already heard about a federal tax credit for home buyers. That's an $8,000 credit, but only for first-time buyers. If passed, this state credit would apply to all buyers and be good for the next three years.