With both President-elect Obama and the new Congress in Washington last week, work on the forthcoming $775 billion economic stimulus plan moved into high gear.

But don't necessarily look to the stimulus plan alone for costly new incentives for home building or real estate sales. There are actually two packages out there -- the new stimulus plus the $350 billion in unspent funds from last Fall's congressional bailout legislation.

The 2009 economic stimulus may well contain some direct assistance to spur the housing market. Senate budget committee chairman Kent Conrad of North Dakota said last week that "it's hard for me to see a stimulus plan (passing Congress) that doesn't have a significant housing component."

But Obama himself suggested that the primary focuses of the economic stimulus would probably be elsewhere -- payroll tax cuts for workers, infrastructure projects and alternative energy development and some form of tax relief for businesses.

Asked about housing relief specifically in an interview on CNBC, Obama said, "I think the most important thing when it comes to declining home values, is number one, preventing further foreclosures that erode home values across the board."

Meanwhile, there were indications on Capitol Hill that foreclosure relief may well be funneled from the unused $350 billion left over from the original $700 billion authorized in the so-called "TARP" bailout fund. The initial $350 billion was used by the Treasury primarily to prop up banks, but congressional Democrats are demand that it now be used to help keep home owners out of foreclosure.

Aides to Obama said one likely housing-related target in the stimulus plan is an extensive "energy retrofit" program for houses and office buildings, including federal facilities. Obama has endorsed "weatherizing" -- improving the energy efficiency - of one million homes a year. That could take the form of additional tax credits or financial incentives, and would create employment -- another key goal.

Last week a bipartisan group of senators gave further impetus to the real estate retrofit idea, calling for a boost in the current $2,000 federal tax credit for energy efficient homes to $5,000.

Wrangling over what gets includes in the stimulus is likely to continue until the Inauguration January 20th, and a final stimulus plan isn't likely to be passed until sometime in February.

In the meantime, housing and real estate lobbies looking for tax credits and mortgage subsidies increasingly understand that there are two money pots in play - not just one. From whichever pot it comes, home building and real estate are likely to end up with a sizable chunk of the action.

Published: January 12, 2009

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consumer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.