ATLANTA – While arguing on behalf of his Fix Housing First bill yesterday on the floor of the U.S. Senate, Johnny Isakson, R-GA, invoked the name of Beacham & Company founder Glennis Beacham, who recently contacted Georgia’s Junior Senator to encourage action on a housing stimulus initiative.
Isakson’s mention of Beacham followed a lengthy telephone conversation between the two longtime real estate industry veterans on Jan. 13 that was precipitated by an email Beacham sent to Isakson on Jan. 7. The following is an excerpt from Beacham’s email:
“As you know, we face one of the most challenging times for real estate in the history of our country. I feel compelled to contact you with some ideas my colleagues, friends, investors and I have been kicking around to improve the market.
“One idea that struck me as brilliant is this: Create a tax incentive that would allow real estate investors to depreciate their purchase over a 10-year period. A two-year time limit could be used.”
Beacham also called for a change in the way high cost areas are determined for the purposes of setting non-conforming loan limits. Currently, high cost areas are determined by evaluating very large Metropolitan Statistical Areas, but Beacham suggested that high cost areas be identified with a more targeted approach - by zip code.
“The Atlanta Metropolitan Statistical Area does not qualify as a high-cost area but 30327 (Buckhead) has an average sales price of well over $900,000…With a $417,000 conforming loan limit in place, purchasers in this zip code must absorb significantly higher interest costs even when they put 20% down,” Beacham wrote. “By increasing the non-conforming limit to bring it more in line with the area's median sales price, purchasers could save thousands of dollars in interest per year.”
Beacham remains positive about the prospects for 2009 but also acknowledges that without Congressional action the real estate market could be more difficult than it has to be this year.
“Many of the buyers out there are locked in a holding pattern, waiting for a great deal even though we in the real estate community view current home values as rock bottom,” Beacham said. “There is only so much discounting that can be done. That’s why I think the housing market needs an incentive like the one I proposed to senator Isakson to break the stalemate between sellers looking to protect what value they have left and buyers looking to get a great deal.”
Isakson’s Fix Housing First proposal - so named because the Senator considers housing as the bedrock of any turnaround in the U.S. economy – calls for a repeal of the $7,500 first time homebuyer refundable tax credit and replacing it with a true tax credit of anywhere from $10,000 to $22,000 that can be claimed on a taxpayers 2008 tax return if they purchase a home in 2009. Isakson said in his remarks yesterday that the $7,500 tax credit passed in 2008 “has not been used to any extent whatsoever.”
“By allowing the credit to be taken against 2008 income taxes, you can monetize that money at the closing, use it as a part of the downpayment, and immediately incentivize the marketplace,” Isakson said.