Whatever your political persuasion, the housing industry is moving through politics like a freight train these days.
And why not? Housing is a key source of employment, wealth, taxes, consumer spending and personal identity in the US. The cynic in me strongly believes that the average citizen votes with their wallet. Well, the wealth effect associated with a weaker housing could make for a higher voter turnout next year (ok, ok thats a “glass is half full” political forecast).
Andrew Leonard’s The politics of home price depreciation in Salon.com that addresses the subject.
A key idea in the article is that the exurbs (beyond the suburbs) have been the bastion of new housing development championed by the current executive branch, yet those areas are among the hardest hit by the housing market slowdown. This housing-politics link resonates with me because of all the recent politics associated with housing:
New York State Attorney Andrew Cuomo fired the first meaningful salvo, bypassing the federal government in going after inflated appraisals and the lenders that pressure them. He makes an argument for state’s rights, so to speak, since the feds have not demonstrated their ability to be proactive when it comes to mortgage lending.
New York Governor Eliot Spitzer jumps on the bandwagon with Cuomo by asking for help from the private sector in New York to create a fund to help troubled borrowers receive loan modifications, similar to Treasury Secretary Paulson’s attempt to bail out the credit markets.
The National Association of Realtors is meeting in Las Vegas right now with heavy attendance (sales are way down) but remains a lobbying powerhouse (in contrast to the appraisal industry) but have burned a lot of goodwill through their misleading market characterizations of the past several years.
The Homebuilders are seeing a 40% contract recision rate in signed contracts and I have read some rates are as high as 125%. Their trade group (NAHB) is actively petitioning against legislation approved by the House today would provide temporary relief from the Alternative Minimum Tax (AMT) and contains mortgage debt forgiveness provisions, the National Association of Home Builders (NAHB) opposes the measure because a plan to tax “carried interest” to pay for the bill would impose a multi-billion dollar tax increase on real estate at a time when the industry is already experiencing a downswing.
According to the CEO of Toll Brothers, housing consumer confidence will improve over the next year as politics move to the front page and “Perhaps as the presidential campaign heats up and moves to the front page, negative articles about housing will move off the front page,” he said. “Then, hopefully, the positive underpinnings of low interest rates, low unemployment and a decent economy will raise new-home-buyer confidence.”
The Mortgage Bankers Association is trying to stem the tide of calls for regulations of their industry by “Calls for Improved Transparency and Accountability for Residential Mortgage Brokers” (I’d ask any appraisal firm shunned by mortgage brokers over the past few years if they are getting more work these days. The answer is “no”.)