Are Energy Tax Credits Working?
Survey Results for 08/05/2009:
What percentage of your sales can be linked to energy efficiency tax credits?
5 to 15 percent
They've had no impact.
Less than 5 percent
15 to 25 percent
25 to 50 percent
More than 50 percent
They've hurt our sales.
While estimates vary on just how large an impact federal tax credits for energy efficient products are having, our poll results suggest the tax credits are having a positive effect on the industry.
Granted, about 20 percent of respondents see no impact and nearly the same number report less than 5 percent of their current sales are probably tied to the tax credit, but well over half say their percentages are higher. A handful even suggest more than half their current sales are tied to the tax credit.
I don't know if these numbers suggest energy efficient tax credits are as popular with consumers as Cash for Clunkers appears to be, but the poll results suggest they have been about as positive for the window and door business as the "Recycle Your Ride" program has been for the auto makers. But what does that mean for the future of window and door tax credits?
Just as Cash for Clunkers was about to run out of money last week, and someday will, the window tax credits are scheduled to end at the end of 2010. Personally, I think as the economy gains some momentum and job numbers, in particular, starts improving, we'll see even greater momentum among homeowners taking advantage of the credits next year. But what will happen after that? Will we see another slump or will the economy be robust enough to produce more demand?
Tax credits could be extended again, maybe as part of a climate change bill, or maybe through some other legislative initiative. I suspect we'll see a few companies and/or industry organizations promoting the idea.
It's worth noting that the National Association of Home Builders has called on Congress to extend and enhance another popular tax credit program established as part of the American Recovery and Reinvestment Act. Specifically, NAHB is asking Congress to extend the $8,000 first-time home buyer tax credit due to expire December 1 through November 30, 2010 and make it available to all buyers of principal residences.
"If Congress acts to extend the tax credit program, it would spur 383,000 additional home sales, including 80,000 housing starts, creating nearly 350,000 jobs over the coming year," says Joe Robson, NAHB Chairman and a home builder from Tulsa, Okla. "That's good for the economy and good for America."
Although there have been some signs of economic stabilization in recent weeks, the unemployment rate is rapidly approaching double-digits. Without a concerted focus on the housing sector, which comprises more than 15 percent of the GDP, any hope for a recovery could fade, he continues.
"At best, it looks like a jobless recovery once it gets underway," Robson adds. "This is why Congress needs to take bold, meaningful action now."
I know plenty of window and door executives out there who philosophically don't like such credits, even if their companies may be benefiting from them in the short term. The shorter window on the first-time home buyer tax credit makes the NAHB's cause more urgent than any similar inititiave the window and door industry might want to take for energy efficient tax credits, but it will be interesting to see if anyone starts laying the groundwork.