Could housing bonds stimulate an industry?

Would "U.S. housing bonds" stimulate early savings for home ownership? The approach would allow American Citizens to buy fully-protected, government-backed bonds in the names of children, as well as for themselves -- in the same manner as U.S. savings bonds, according to Ric Katz, president of Pinnacle Marketing & Resources, Inc., a Manhattan-based real estate marketing firm, who conceived the idea.

Years later, when the bond-holders are ready to enter the home market, the bonds can be redeemed at interest-inflated maturation -- but used only to buy a first house, he adds.

The bonds would be issued in denominations and at interest rates comparable to the present savings bonds, noted Katz, who has already outlined his proposals in a letter to U.S. senators and representatives.

"Housing bond-holdezs would have the same tax-deferred benefits now enjoyed by savings-bond holders," reported Katz. "Recipients of the bonds would b.e free of taxes for as long as they own their first home."

A major advantage of the housing bond program is that the capital invested could be made available for reduced intezest-rate mortgages by the government for first-time purchasers of new homes, explains Katz. In addition, the money accrued could remain tax'deferred until the homebuyer sells the home -- thereby further stimulating a desire to save, he adds.

"Everyone wins with this arrangement," said Katz. "First-time home-buyers reap the benefits of a tax-deferred savings fund which can cover a down payment and reduce the mortgage commitment. Government certainly benefits by getting an infusion of badly needed investment capital immediately, instead of waiting years to collect its share through taxes. "Even financial institutions -- which will lose some investment now being channeled into tax-deferred IRA instruments will benefit ultimately because increased home-buying means additional demands for construction and permanent financing."

Perhaps most importantly, Katz points out, his U.S. housing bonds program could spark a resurgenee in America's homebuilding industry which is currently badly in need of some kind of stimulation.