There's been a political sea change at the White House and on Capitol Hill in the past two weeks that could have major significance for home buyers, sellers and builders across the country later this year.
The Reagan administration and key Republicans in Congress have concluded reluctantly that some form of emergency stimulus to the housing market is unavoidable in 1982.
That conclusion -- unenthusiastic though it is -- raises the chances that you'll see one or more of the following proposed in the immediate months ahead:
* A new, temporary program of federal tax credits for buyers of unsold houses in builders' inventories. The credit, which would come off the bottom-line income tax bill owed by qualified purchasers, could range in size from $3,500 to $5,000. It might be restricted to purchasers who haven't owned a home during the past three years (i.e., first-time and "return" buyers), but could assist 200,000 to 300,000 consumers.
* An emergency program of government-assisted, three- to five-year mortgage rate "buy-downs" for purchasers of resale and new homes. The buy-down (short-term interest rate subsidy) could be in the three to four percentage point range. A conventional 16 1/2 percent loan, in other words, would become a 12 1/2 to 13 1/2 percent mortgage for the borrower during the subsidy period. The Treasury would absorb the short-term cost.
* Expansion of state and local use of tax-exempt mortgage revenue bonds to stimulate housing sales and production. Publicly issued mortgage-revenue bonds--which can cut effective interest rates to consumers by two to four percentage points--have been restricted by federal statutory and regulation problems for the past two years. With the right modifications, however, according to Reagan administration officials, state and local bonds could produce several hundred thousand additional home sales within the coming year.
* "Recapturable" interest subsidies for buyers of new and existing homes. A program known as "Section 235 (q)" was readied during the final year of the Carter administration but never saw action. A dusted-off model of the same program would deeply slash interest rates to buyers; the entire amount of the subsidy would be repayable to the Treasury when the home was later resold or refinanced.
These and a briefcase full of other proposals have been bouncing around Capitol Hill and the Department of Housing and Urban Development for weeks, courtesy of the National Association of Home Builders, the National Association of Realtors, and the U.S. League of Savings Associations.
Trade groups like these--which were rock-ribbed, laissez-faire Reaganites a year ago--have stepped up the pressure since January for some form of special attention by the White House to the plight of the real estate market. They've begun taking the political gloves off, plotting with Democrats in the House, and warning vulnerable Republicans of contribution cut-offs in the fall congressional elections.
That get-tough stance, plus a grudging recognition by White House policy makers that a real estate revival could help pull the entire economy out of recession, has produced fundamental change inside the adminstration.
The President's cabinet-level housing emergency task force, appointed last week, is chaired by the trade groups' chief administration advocate: Samuel R. Pierce, secretary of HUD.
It's also composed of two savvy political operatives, Edwin Meese III and James A. Baker III, both of whom are regarded as pragmatists on the housing issue. Labor Secretary Raymond Donovan (a former construction executive), Agriculture Secretary John Block and Commerce Secretary Malcolm Baldrige are similarly regarded as political realists, sympathetic to the needs of a powerful segment of their constituencies.
The President's decision to rush the work of the task force (it has a deadline for recommendations of no later than March 31) raises the chances for action this spring or early summer.
"They're going to come out with something for home buyers and builders, there's no question about it," says a key Banking Committee Democrat in the House. "This is no paper game. They're worried politically, and they want to muffle our thunder [on housing] well before election time."
The Democrats on both sides of Capitol Hill, for their part, will probably have their own package of housing aid together by April, including help for lower-income rental housing. (The President's task force is not likely to propose large increases in lower-income subsidies. The fiscal 1983 budget submitted to Congress last month practically eliminates new construction activity in this field.)
All in all, the scenario adds up to precisely what the real estate groups and the Reagan team traditionally preached against: more federal involvement in housing, more federal involvement in the capital markets and greater expenditure of federal funds.
Given the devastated condition of the real estate market, though, it's a policy revision that's pragmatic . . . and long overdue.