Elimination of the current credit crunch is the best way to provide a shot in the arm to the homebuilding industry, according to Tommy Thompson, recently elected vice president-secretary of the National Association of Home Builders.
The Owensboro, Ky., resident and homebuilder said many homebuilders are going out of business, and one of the biggest contributing factors is the inability to get credit from lending institutions. "Credit is the lifeblood of the construction industry," he said.During an interview during the Utah Builders Conference, sponsored by the Home Builders Association of Utah in the Hilton Hotel, Thompson said one of the reasons for the credit crunch was the savings and loan debacle, which caused many lenders to back off from real estate loans.
A circular from the Office of the Controller of the Currency several months ago noted that real estate was a risky investment, which effectively shut down housing credit. He said that in some instances builders can't get housing loans even though they have pre-sold the house.
Thompson said his organization isn't asking for an emergency housing bill but wants some type of "old fashioned" thinking that will help people in the construction industry who have lost their jobs to recover their buying power and help them pay taxes.
If 100,000 more houses could be constructed this year, over and above the ones that are planned, the action would generate $4.6 billion in wages, he said.
Another thorn in homebuilders' side is "onerous and costly" regulations that, in many cases, overlap and cause the price of housing to escalate. "We need permission to do everything and because "time is money," the price of housing escalates accordingly.
He pointed to many regulations being generated by people who already have houses and want rules to keep people out of make it difficult for them to build. He said there also are plenty of regulations dealing with the environment that either prevent homebuilding or make it very restrictive.
Thompson said it isn't unusual in many areas of the United States for a two-year lapse between the time a builder takes control of some land before he is able to start construction. The resultant delays add to the cost of a house.
Impact fees also are a problem in homebuilding, Thompson said, with the money going for schools, roads and parks. In some instances, the money is spent in areas a long distance from where it was collected, he said.
Thompson said Utah is one of 22 states where the housing industry is good, a contrast to the problems in the northeastand some parts of the southwest and California. In some California locations, the price of housing far exceeds the ability of people to pay, he said.
Thompson said housing permits in Utah in 1990 increased 17.8 percent, which shows the construction industry in the state is making a valuable contribution to the economy.