“Foong on Finance”: The $775B Stimulus Plan May Mean Money for Us
- Jan 16, 2009
I remember the recession of the late-1980s-early-90s. Wave upon wave of news kept coming in 1989-‘90 of layoffs at corporations. I thought at the time, “They are laying off so many people that there will be no one left to buy the goods they produce.” Sure enough, by the early 1990s, the situation was pretty bad.
But one bright spot at the time was the Low Income Housing Tax Credit (LIHTC) program, which played a large part in driving this magazine’s recovery. The reason? Although the market-rate apartment industry at the time was not doing so well, money was still flowing to the affordable housing sector via the government in the form of the LIHTC program and tax credits. The lesson? Money from the government can sustain an industry and trickle down.
This time round, the LIHTC program is not performing so well. There are few LIHTC buyers, for one, due to the collapse of corporate profits which eliminates the need for tax credits. However, President-Elect Barack Obama is preparing an economic stimulus program of as much as $775 billion over two years. There is talk of urban development and infrastructure spending. And although any funds for housing in the remaining $350 billion in TARP (Troubled Assets Relief Program) may be used mostly for the single-family sector, there could be money for multi-housing in the larger, stimulus program.
Anuradha Kher, MHN online editor, spoke to Denise Muha, executive director of National Leased Housing Association yesterday [ “TARP Money Not Likely to Help Multifamily” published Jan. 13, 2009.] As Muha indicates, Democrats sent to the house an outline of a plan for a “big amount” to be allocated to affordable and multifamily housing.
How the government will fund ever-increasing trillions of dollars of spending, whether China will continue buying the Treasury bills, and what will all this mean for hyper-inflation etc. is another question. But for now, this seems like more hope for the industry and for housing.
(Keat Foong is the executive editor of Multi-Housing News. You can contact her at email@example.com)