The chart to the right (click to enlarge) is from Calculated Risk and shows, obviously, the enormous supply of single family housing currently held for sale by various financial entities. Knowledgeable readers will recognize that this is not the whole story given the large number of anticipated foreclosures, condominium units that don’t make it into a lot of the official statistics, likely fallout from the government’s mortgage mediation programs and so forth. The infamous shadow inventory.
I put it up to illustrate just how much the Congress of the United States is on top of the fact that we have enough completed residential real estate units in this country to last for more than a few years.
This is from the National Association of Homebuilders:
Thanks to an NAHB-supported amendment approved just before the legislation was passed by the House of Representatives on June 17, builders will have the same access as other small businesses to loans from a $30 billion program created by H.R. 5297, the Small Business Lending Fund Act of 2010.
The House measure would provide $30 billion in capital to community banks to expand small business lending. Of particular interest to NAHB members, the last-minute change to the legislation allows the fund to be used to help ease the severe shortage of acquisition, development and construction (AD&C) loans for small building firms.
NAHB was deeply engaged throughout the legislative process to ensure that this crucial language was included in the bill, and NAHB Chairman Bob Jones issued a press statement applauding the efforts of Reps. Brad Miller (D-N.C.), Joe Baca (D-Calif.) and Majority Leader Steny Hoyer (D-Md.) in accomplishing this goal and calling for prompt Senate action on the bill.
The amendment referencing residential construction passed by a vote of 418 to 3, demonstrating that lawmakers understand the importance of restoring health to the housing industry in order to promote economic recovery.
Do you suppose that it occurred to more than 3 members of the House of Representatives that the shortage of AD&C loans might be a function of sober bankers coming to the conclusion that the extension of credit to build more houses was not warranted given the supply metrics? One would hope so, if only because it is preferable to believe that the votes of the 418 were driven by cynical political agendas as opposed to a rational assessment of the need to goose housing construction.
Think that this will send the NAHB and its members away happy? Guess again. They apparently anticipate booming demand for new homes:
NAHB will also be working to build support in the House for stand-alone legislation (H.R. 5409) sponsored by Reps. Miller and Baca, along with Carolyn Maloney (D-N.Y.), that would create a $15 billion loan guarantee program for residential AD&C lending under the Treasury Department.
With headwinds such as these, I doubt that the austerity crowd has much chance.