Tax Update Blog: Permalink

« Previous · Tax Update Blog Home · Next »

WE CAN'T MOVE HOMES WE ALREADY HAVE. LET'S SUBSIDIZE SOME MORE!

May 27, 2008

The Des Moines Register has an article from another world today - a world where there are no unsold houses and unrented apartments, and the huddled masses mob real estate offices every time another home is listed for sale. In that world, we need government subsidies to help these poor underhoused folks:

The national credit crisis is shrinking the market for tax credits - key to financing affordable housing - and threatening projects in Iowa, officials say.

Here's why: The investors who bought the tax credits in the past - many large banks and finance companies like Freddie Mac and Fannie Mae - are posting losses from failing subprime mortgages and no longer need credits to reduce their federal tax liability.

That means less money - or possibly no funding - for some tax-credit housing projects, especially developments in rural Iowa or those with niche markets like renters with disabilities.

Meanwhile in the world the rest of us live in, one of the largest home developers in the area has shut down because it couldn't move its inventory fast enough, Downtown is full of empty loft apartments, and Des Moines area apartment vacancies are at some of the highest levels in years:

Source: CBRE January 2008 Apartment Survey

Yet we're supposed to believe we need to subsidize more homebuilding right now, and that the devalued credits are somehow a problem for the rest of us.

The article notes that one of the tax credit developers is well-connected state senator Jack Hatch. Not that tax credits are an insiders game or anything.

Tags: tax policy.

      Bookmark: del.icio.us • Digg • reddit