Ways the Next President Can Help the Housing Industry
Originally published by: The Hill — August 15, 2016
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Housing industry advocates have a message for the next president: It's time to move on from the crash.
The housing market collapsed nearly 10 years ago, yet the sector’s growth remains stagnant, with sales and construction well below their peaks in the early 2000s.
The industry is looking to Hillary Clinton or Donald Trump to get things back on track. They are pushing the presidential candidates to shift the focus of housing policy to cutting and clarifying regulations and reforming the nation's mortgage giants Fannie Mae and Freddie Mac.
“We have two candidates who are at least talking about housing and growing the housing market as opposed to what the current administration is doing,” said David Stevens, head of the Mortgage Bankers Association.
“[The Obama administration] walked into a housing recession, and it was all about regulation and enforcement. It was not about creating opportunity, it was about protecting homeowners, putting tougher rules in place and stopping bad practices,” Stevens said.
Stevens said he doesn’t blame the White House for their sweeping regulatory efforts because President Obama inherited a "terrible recession" brought on by a housing collapse. Still, he said the next president would have an opportunity to change the dialogue.
“I think the way we should all be looking at this is at its core we have a chance to pivot here with a new administration, whoever it is, because both are coming at this with much more of a blank-slate approach with a clean table of options without all of this mess in the front window related to a housing recession,” he said.
“They’re trying to look at both sides with ways to extend homeownership, and regardless of anything else, just that attitude is going to be welcomed.”
Both presidential campaigns talked to homebuilders this past week during industry meetings in Miami.
Jerry Howard, president of the National Association of Home Builders, who hosted the Clinton and Trump campaigns, said it is time to get beyond the implosion of the housing market.
“We’ve now gotten far enough past the housing crisis, and I would suggest respectfully that the efforts since the housing crisis have been band-aids. And now we really need to look at the root of the problems and how to correct them,” Howard said.
Builders plan to ask the next administration to look more closely at the goals for the industry.
Specifically, they are calling for federal rules to be clarified to boost homeownership while making sure that consumers are protected from any sort of "unseemly activity," Howard said.
“You need legislation that simplifies the home buying process while protecting the homebuyer,” he said.
Howard noted the Thursday economic message from Clinton, the Democratic nominee, called for reduction of red tape and said he hopes translates to reducing some of the burdens on the market.
“Again, being an optimist, I’m hopeful cutting red tape means cutting the problems that business people have in complying with regulations due to the slowness of bureaucracy to react,” Howard said.
On average, regulations imposed by all levels of government account for 24.3 percent of the sales price of a new single-family home, according to a May study by the NAHB.
Trump, the Republican nominee, seized on that data during his Thursday remarks, calling what is happening on the regulatory front under the Obama administration “horrible.”
"No one other than the energy industry is regulated more than the home building industry," Trump said. "Twenty-five percent of the cost of a home is due to regulation. I think we should get that down to about 2 percent."
The Republican presidential nominee vowed to wipe out a majority of the regulatory burdens starting with a moratorium.
"We will impose a temporary moratorium order on new agency regulations," Trump said.
"We'll cancel all illegal and overreaching executive orders signed by President Obama," he said.
"We will eliminate all regulations that kill jobs. We will remove the bureaucrats that only know how to kill jobs and replace them with experts who know how to create jobs without regulations."
Stevens said a wholesale elimination of regulations from lending and servicing to construction would be difficult.
“A pledge by a candidate to roll back regulation is not as easy to complete as it is to say it because a lot of it would require Congress to roll it back,” he said.
Stevens and Howard said there are plenty of areas where a new president could start making changes, including the promotion of home buying, adding incentives for building entry-level housing, improving technology to better manage the mortgage approval process and working to speed up the regulatory process.
The industry also is calling on Congress to overhaul Fannie and Freddie and wants the new administration to look at improving qualified mortgage rules and streamlining others to create more liquidity.
Howard wants a the next president to insist that bureaucrats implementing regulations do so as quickly as possible "because the time and cost it takes to comply is absolutely and directly due to the slowness of the regulators in making sure there is compliance."
Clinton has said she would seek clarity on housing rules and has proposed a broad agenda that includes help for first-time homebuyers seeking to save a down payment.
Gene Sperling, a top economic adviser to Clinton, spoke to the homebuilders and said that even though housing finance reform is "really tough," any legislation must include a government guarantee to protect the 30-year mortgage.
"You need a backstop to ensure the United States of America still has a 30-year fixed mortgage," Sperling said. "That is something that gives people the opportunity to become home owners in this country."
Builders and mortgage bankers cite statistics that Americans want to buy homes and say conditions must be improved to make it happen.