By JOSEPH KIRSCHKE
WASHINGTON — Prominent real estate and policy experts sounded unanimous yet guarded optimism during a session this week at the National Association of Realtors annual midyear conference.
The states now in deepest trouble — notably Florida, Nevada and California, which led the collapse — may yet lead the nation’s housing market back to prosperity, according to some members of the 16-member panel that was featured during a Real Estate Summit on Tuesday here at the Marriott Wardman Park Hotel.
Regardless, radical changes are needed for improvement of the nation’s housing market, and there were varying opinions about to how to get there.
Tom Lawler, founder of Lawler Economic & Housing Consulting LLC, voiced concern that dangerously low staffing levels at mortgage services companies are hindering homeowners from getting approved loans in a timely fashion. "It’s horrible if you need to deal with problem loans," he said.
Panelists concurred that more responsible lending and housing practices have been the biggest lesson learned from the current crisis. "Ownership — where people rely on homeownership and not appreciation — we’re going in that direction," Lawler added
But problems remain severe, according to Bruce Katz, vice president and founding director of the Metropolitan Housing Program at the Brookings Institution, a Washington, D.C., think tank. He urged brokers to think long term about bringing new skills and innovation to the market. "We’ve had no regional economic plan in these regions in ages," he said.
He painted a dark assessment of the current situation, too, noting more than 30 percent of mortgages in Florida and California remain in default. "The collateral damage is amazing — in terms of tax revenue, local government, and the social aspects like crime. It’s systemic and it’s endemic," he said. "It’s an existential question."
More specifically, there are only 300,000 new homes on the market nationwide, added Jerry Howard, president and CEO of the National Association of Home Builders. One reason for this, he added, is that banks are continuing to seek equity that homebuilders simply don’t have.
The result? Abandoned homes. "The acquisition (of homes) is vital to the recovery of the housing markets," he added. …CONTINUED
Allen Meltzer, a professor of political economy at Carnegie Mellon University’s Tepper School of Business, advocated using the current stimulus bill as a vehicle to extend tax credits to homeowners seeking mortgages. "You can’t get a recovery without strengthening the homebuilding industry," he noted.
Something else the government would be wise to act on, according to Meltzer: shutting down the "liabilities" he called Fannie Mae and Freddie Mac. "They should be eliminated," he said. "They’re a mess."
Conrad Egan, the president and CEO of the National Housing Conference, urged a collective approach that would allow the FHA to redefine its products and become "more nimble." We need "financing systems that are transparent — we’ve been in an alternate universe of financing that developed between 2005 and 2006," he said. "It was unreal and we have to get back to basics."
Fannie Mae and Freddie Mac, he added, have to be strengthened, he said, echoing Alan Greenspan’s earlier comments.
"We have a system that’s broken and corrupt," Meltzer interjected, to the sounds of applause and laughter. "Why do you want to strengthen it? Why not get rid of it so the voters and the taxpayers know what (the government is) doing?"
Of all the speakers, Michael Kercheval, the president and CEO of the International Council of Shopping Centers, was perhaps the most optimistic. In the wake of comments that more prudent lending policies would create more generational homeownership, he added that national demographics are on the side of NAR members.
"The high school graduating class in 2010 will be the biggest in the history of the United States — you have that enormous bubble moving through our system," he said. "There’s going to be a lot of economic prosperity in the not-too-distant future."
But with changes come challenges: namely, an increasingly multicultural U.S. population, he added, which will mandate new ways of thinking among NAR members. "The diversity is increasing and we have yet to build houses, offices and shopping centers for more diverse audiences," he said.
Joseph Kirschke is a freelance writer in Washington, D.C.
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