InterviewUS housing bill to have delayed effects

"This market is so big, once it gets momentum, it's like trying to turn an aircraft carrier in the ocean," said Jim Gaines, research economist for the Real Estate Center at Texas A&M University. "It is not going to turn on a dime."

The Housing and Economic Recovery Act of 2008 calls for several provisions intended to boost the US housing market, which is in a multi-year slump.

The slump has caused demand to drop for such products as wood-treatment chemicals, paints and coatings, adhesives and polyvinyl chloride (PVC) pipe.

To boost house sales, the act provides a temporary tax credit to first-time house buyers. To reduce foreclosure rates, the act sets aside money to help house owners in danger of default.

Other provisions increase the size of the loans that can qualify for various programmes. Loans in such programmes generally have more favourable rates, making housing more affordable.

The act has other provisions intended to address the excesses that led to the current slump.

Any effects, however, could take months to manifest themselves, Gaines said.

By nature, real-estate markets move slowly, he said.

The timing of the recovery act will also delay its effects, he said. The bill became law near the end of the summer, when the US housing market starts to slow down.

The recovery act has many individual remedies, so quantifying their cumulative effect would be difficult, Gaines said.

Moreover, the act could be irrelevant for several buyers who have left the house market, he said. Many investors, second-home buyers and sub-prime buyers abandoned the market following its collapse.

The recovery act could affect consumers who are ambivalent about buying a house, he said. "It's trying to stimulate people who could be buyers."

However, it is difficult determining the size of such a market, he said.

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