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Transition Team Weighing Blockbuster Housing and Stimulus Proposal

By David Sassoon

Dec 12, 2008

The automobile industry was revolutionized with the invention of the hybrid engine that could capture and store energy that would otherwise go up in smoke. Now, there's a counterpart invention for the housing market that extracts the energy wasted by buildings, and uses it to power economic recovery.

It takes the form of a plan that promises to save consumers $142.33 billion to $200.88 billion in energy costs and mortgage payments over a five-year period, significantly reducing the risk of mortgage failure while increasing disposable income and creating millions of new jobs.

The plan of action is now in the hands of the Obama transition team and could rewrite the book on how the stimulus package gets put together. It's called the 2030 Challenge Stimulus Plan and it was authored by Ed Mazria and his team at Architecture 2030.

He's just back from Washington where he presented the Plan to Congressional staff and industry groups, going to 20 meetings a day, explaining how it works. "My feet were killing me," he said, "going around to all those buildings all day long." The payoff was that listeners across the board were enthusiastic. It also got sent to the Obama transition team, where the Plan is now being reviewed.

Architecture 2030 has figured out a way to direct federal stimulus into the beleaguered building sector so that it succeeds in doing these things:

  • Reduces the cost of mortgages
  • Reduces energy consumption and energy bills
  • Creates millions of jobs and stimulates economic recovery coast to coast
  • Returns the stimulus money back to government coffers.

It sounds to good to be true. You can't get something for nothing. Where's the hitch, I wondered.

The answer is, there is no hitch. There actually is a huge something. It's a very big untapped asset that Mazria has figured out a way to harness: the energy wasted by almost every single building in the nation. Capture the dollar value of that energy and you've created a powerful engine of economic recovery situated at the heart of America's sweet spot: its homes and buildings.

Here's how the plan works.

The federal government creates what's called "a mortgage buy-down program." If you are a homeowner, you can bring your mortgage rate down 2 or 3 or 4 points -- with Uncle Sam picking up the difference -- if you improve the energy efficiency of your home. It's an offer you can't refuse, because it means you can save hundreds of dollars on a typical monthly mortgage, plus hundreds more in reduced energy bills -- in perpetuity.

Those savings immediately go in to family coffers and can get spent, stimulating the economy. At the same time, all the demand for energy efficiency upgrades creates millions of jobs. The government recoups its investment in the mortgage buy-down from the income tax collected from the newly employed. And greenhouse gas emissions go down dramatically.

He walked me through a hypothetical example that highlighted the huge incentives the plan could unleash. Say you're a homeowner with a $272,000 mortgage at 5.55%, paying about $1550 a month. You decide you want your mortgage rate to drop to 3%. In order to qualify for the reduction, you have to improve the energy efficiency of your home 75% below code, and it's going to cost you a pretty penny: about $40,000.

Existing tax credits would take care of about $10,000 of that cost. The rest would get tacked on to your existing mortgage, bringing it up to $302,000. But, at 3%, you'd be paying only about $1280 -- saving almost $300 a month on the mortgage alone, plus another $150 in reduced energy costs. The value of your home rises, you have more disposable income, you've given work to someone to do the upgrades for you -- and s/he's now paying federal taxes, and you've reduced your carbon footprint.

Here's how Mazria described it in his plan summary, which includes a mechanism for leveraging value of lost energy from commercial buildings in a slightly different fashion:

Its true that US real estate

Its true that US real estate market has a major role as well as the US economy plays the important in the world's economy. Just because of one country whole world is suffering don't you think its a big loop hole.

This all sounds to good to

This all sounds to good to be true!

If this is likely to save us thousands of pounds you can bet that there will be some increase present to counter the savings.

US realestate market is

US realestate market is major in worlds housing markets...... they play big role in, hope it wll recover soon

Lake District

The Small House Society is a voice for the Small House Movement.It's not a movement about people claiming to be 'tinier than thou' but rather people making their own choices toward simpler and smaller living however they feel best fits their life.the small-house movement includes people who are making a conscious choice to live in a smaller home rather than choosing a larger one. It includes people who could afford McMansions but live in only a 3,000 squre-foot home all the way down to single people living in a tiny one-room home.  

Quick House Sale

The fear of a repossesion of home is always on the minds of a person who is purchasing a home through a home loan for a term of around 30 years.Due to the uncertainty factor,over such a long term period of time,a person is skeptical about the mortgage arrears.There is no harm in applying for a sell and rent back scheme as you can keep your home and live in at as a tenant instead of losing your home forever to the mortgagers.Quite often the mortgage arrears occur without any fault of yours as you were perhaps unable to work it out or you became a victim of situations.Failure in the repayment of mortgage amount can turn out to be devastating but fortunately with the sell and rent back scheme available you still have a chance to regain the posession of your home in future.

Federal tax cuts for middle and lower-income

Federal tax cuts for heart and lower-income folks that are part of the $787 billion stimulus plan will go into effect today.

The tax cuts provide $400 to individuals making less as opposed to $75,000 and $800 to married couples making less as opposed to $150,000 per year. The tax credits, that will show up in workers paychecks, serves to be phased out for those above the thresholds. Couples creating $200,000 and those of us causing $100,000 will not take out any breaks.

debt-oriented "solution"

I'm a homeowner, but I had the foresight to pay off my mortgage. So I get to subsidize other people's home improvements with my taxes, but I'm not eligible for any benefit. I'm under-whelmed.

Love Thy Neighbor

There are all kinds of tax credits and subsidies available for energy efficiency improvements for people in your shoes. Most homeowners can't afford them -- the up front investment is too high. The plan would help your neighbors hang onto their homes, get jobs, pay taxes, and reduce both energy use and global warming emissions.

What's in it for you? Nothing I guess if you see your self-interest ending at your property line. Quite a bit if you care for your neighbor, your community, your country, the earth.

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