If the Car Industry Can Have Its Stimulus Bill, the Home Building Industry Should Have One Too!
In a recent interview with CNBC, Warren Buffett made a chilling statement for most of the people associated with the home building industry.
Mr.
Buffet said, "If you want to end the recession as soon as possible, you do nothing to encourage new housing construction.
" I understand Mr.
Buffett's solution to balance supply and demand for new households before adding more homes to an already struggling market.
But, being a recent victim of the "no new construction" economy, I can think of better ways of stimulating the economy without a "no new construction mandate.
" The solution can be found in that every suffering domestic car industry.
It seems there are a lot of cars on the road that are old and rusty and use too much gas.
It is also apparent that people are not buying new cars the way they used to.
So the government passed a "cash-for-clunkers" bill that gives car buyers a voucher of up to $4500 for their old cars when they trade them in for new ones.
Basically, we'll buy your old car and you go buy a new one.
Why can't we do that for residential home owners? Most people who want to buy a new home need to sell their old home first.
And if they can't do that, why not build a new home on the property they already own? Most homes built before 1990 are not very energy efficient even with modern upgrades.
To save future energy consumption and stimulate a vital industry like home construction, why can't home owners get some incentive to tear their house down and rebuild with a new energy efficient home? I know there is the tax incentive for energy efficient remodeling of about $1500 (or 30% of the cost of the remodel whichever is less), but we need to get residential construction back on it's feet and stimulate cash flow in the entire building product pipeline.
I can't think of a better to do this than to tear the old homes down and put up new ones.
Think about the products and labor used during home construction.
Most of the products are domestically manufactured and domestically supplied.
The homes are built (for the most part) with domestic labor which supports the local economy.
The auto industry - the industry with the stimulus bill - is comprised of global parts suppliers and labor scattered all over the world.
Stimulating domestic housing construction will do more for the domestic economy than the stimulus passed for the big three auto makers.
It may seem to be a crazy idea but local governments have been doing this for years.
They call it "urban renewal.
" Public works projects always target "decaying areas" of a city by building football stadiums, shopping malls or tax free industrial zones.
Maybe what we need now is "suburban renewal" where we take the old suburban homes of the 50's, 60's and 70's and make them into shiny energy efficient dwellings of the future.
No need for new roads, new infrastructure, schools, firehouses, etc.
They are already built - and built close to where everyone currently lives.
Simply tear down the old houses and build new ones (just like the old ones, but better) in its place.
If the auto industry has its "cash-for-clunkers" bill, the housing industry can have a "dollars-for-dwellings" bill.
It will provide an instant economic stimulus, improve home prices and save costs on future energy generation.
Mr.
Buffet said, "If you want to end the recession as soon as possible, you do nothing to encourage new housing construction.
" I understand Mr.
Buffett's solution to balance supply and demand for new households before adding more homes to an already struggling market.
But, being a recent victim of the "no new construction" economy, I can think of better ways of stimulating the economy without a "no new construction mandate.
" The solution can be found in that every suffering domestic car industry.
It seems there are a lot of cars on the road that are old and rusty and use too much gas.
It is also apparent that people are not buying new cars the way they used to.
So the government passed a "cash-for-clunkers" bill that gives car buyers a voucher of up to $4500 for their old cars when they trade them in for new ones.
Basically, we'll buy your old car and you go buy a new one.
Why can't we do that for residential home owners? Most people who want to buy a new home need to sell their old home first.
And if they can't do that, why not build a new home on the property they already own? Most homes built before 1990 are not very energy efficient even with modern upgrades.
To save future energy consumption and stimulate a vital industry like home construction, why can't home owners get some incentive to tear their house down and rebuild with a new energy efficient home? I know there is the tax incentive for energy efficient remodeling of about $1500 (or 30% of the cost of the remodel whichever is less), but we need to get residential construction back on it's feet and stimulate cash flow in the entire building product pipeline.
I can't think of a better to do this than to tear the old homes down and put up new ones.
Think about the products and labor used during home construction.
Most of the products are domestically manufactured and domestically supplied.
The homes are built (for the most part) with domestic labor which supports the local economy.
The auto industry - the industry with the stimulus bill - is comprised of global parts suppliers and labor scattered all over the world.
Stimulating domestic housing construction will do more for the domestic economy than the stimulus passed for the big three auto makers.
It may seem to be a crazy idea but local governments have been doing this for years.
They call it "urban renewal.
" Public works projects always target "decaying areas" of a city by building football stadiums, shopping malls or tax free industrial zones.
Maybe what we need now is "suburban renewal" where we take the old suburban homes of the 50's, 60's and 70's and make them into shiny energy efficient dwellings of the future.
No need for new roads, new infrastructure, schools, firehouses, etc.
They are already built - and built close to where everyone currently lives.
Simply tear down the old houses and build new ones (just like the old ones, but better) in its place.
If the auto industry has its "cash-for-clunkers" bill, the housing industry can have a "dollars-for-dwellings" bill.
It will provide an instant economic stimulus, improve home prices and save costs on future energy generation.
Source...