Bailouts and stimulus programs have been plagued with criticism -- rightly, in most cases. But you might be surprised to learn who some of the annoyed critics are.
When asked about the expiration of the first-time homebuyers credit -- a stimulus no doubt designed to boost homebuilders -- in a recent conference call, D.R. Horton
Frankly, I don't want the tax credits to be reenacted or be recreated or extended. We want to get back to a normalized market. It's a lot easier to run a business based upon designing your business with the current demand I suppose than having any kind of stimulus or incentives to create abnormal demand.
This isn't terribly surprising, actually. As I showed last week, the initiation, expected expiration, surprise extension, and eventual removal of the homebuyers' credit created gut-churning volatility in the housing market. Sales would spike one month, only to faceplant the next. When you're a homebuilder trying to keep supply at appropriate levels to satisfy demand, that scenario is your worst nightmare.
Criticism from stimulus beneficiaries is nothing new. Wells Fargo's
But there's a key difference between these criticisms and Tomnitz's plea. Banks benefited financially from their bailouts -- they just hated the stigma that came with it. The housing credit, on the other hand, may prove to be a net financial drag on homebuilders, depending on how they managed production during the wave of unpredictable "abnormal demand," in Tomnitz's words.
I'm not one to blanketly swear off all stimulus money. But most of the housing stimulus programs in the past two years have been terribly misguided -- not only ineffective, but a downright hindrance. The first-time homebuyers credit tops that list.