photo credit: hiddedevries
On Tuesday January 26th 2010, Trulia’s CEO Pete Flint will be hosting an industry call discussing how President Obama did in his first year in regards to turning around the housing crisis. Pete will be joined by real estate experts and pundits Jonathan Miller, President and CEO of Miller Samuel and Howard Glaser, Principal of The Glaser Group.
We’ll share some results from a recent study that asked consumers to grade how President Obama did in his first year and what steps they thought President Obama should take in 2010 to improve the housing crisis. Additionally, we’ll discuss if consumers still feel that home ownership is part of the American dream and whether or not they are enthusiastic about homeownership.
Last year, we asked consumers if homeownership was part of their American Dream:
Furthermore, to get a pulse from our very own real estate community of home buyers, home sellers and real estate professionals on Trulia, Pete asked our community to share their thoughts on how they felt President Obama handled the Housing crisis in 2009:
At the time of this screen capture, 248 people shared their thoughts. Many of which were extremely passionate.
Pete also replied to the community and encouraged more great feedback as he will quotes some of the people’s comments in the call:
Here are some of the comments Pete highlighted in his reply:
A broker from Florida responded: “Handled” the housing crisis… I think ignored might be a better statement. He’s an incredible orator and an even better actor. Take away the teleprompter and the scripts and he’s useless. The grade: an F.”
A homebuyer from Michigan said: “If you look at what really put us in this mess was several years of the “same ole same ole.” Obama was handed such a mess that no one person, or no single solution, could ever fix it in a reasonable time frame. Sure Obama did make a few mistakes, but he did come up with some programs that at least kept us out of going down the same direction and at least tried to level things off.”
An Agent from Washington: “Obama’s grade is a solid C. He has the Federal Reserve buying mortgage backed securities to hold down interest rates. He has extended the Tax credit for buyer’s and both have helped keep the Housing industry from sinking further than it already has. His keeping homeowners in their home program has been a huge failure.”
A home buyer from Santa Barbara, CA says “his policies have had some success in addressing the growing problem of falling home prices, and stemming foreclosures, all of which will satisfy some of the demands of the industry. However, the fundamentals of the economy remain vulnerable. The extent to which he has been successful in addressing the problem of the economy as a whole, need to be viewed not only in the context of the scale of the problem, but also within a realistic time frame, and one year would seem too short a time frame to pass harsh judgement.”
If you would like to listen to the call and chat LIVE, please click here on Tuesday at 12:30 pm PST……or, just watch LIVE below.
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January 27th, 2010 at 6:27 pm
“Additionally, we’ll discuss if consumers still feel that home ownership is part of the American dream and whether or not they are enthusiastic about homeownership.”
In the Phoenix area real estate market, a lot of homeowners have been burned by 30%+ drops in housing values. But still, homeownership makes a lot of sense for many (not all) homebuyers in many (not all) cases. Why? The power of leverage, for one. Even taking the recent housing market catastrophe into account, home values trend upward over time. And there’s no other investment that the typical American can leverage so significantly — for amazing gains.
January 30th, 2010 at 10:37 am
Having been in the mortgage business for 22 years I can tell you that the Osama plan is useless and the Fannie and Freddie refi programs do not work as values have fallen too far for people to take advantage of them. Even if rates were 2%, and you could qualify for a new loan under the current more stringent guidelines, the fact you owe 150% of the value of your home still keeps you from refinancing. People would love to stay in their homes but can’t so they are mailing their keys in by the thousands. Here is a workable plan and it will only cost the government a miniscule $192.5 Billion.
OPEN LETTER TO MR. OBAMA AND CONGRESS
Simple Solution vs. Billions in Spending
PROBLEM: Real Estate in America is the mainstay of everyone’s life and until it is stabilized the economy has a minimal chance of improving.
FACTS BEARING ON THE PROBLEM:
1. Real Estate Values soared to un-supportable levels from 2004-2007.
2. Lending Guidelines’ were severely compromised and many non-qualified individuals received mortgages.
3. Real estates upward spiral stopped, causing a number of defaults by overleveraged homeowners.
4. Holders of mortgages such as Fannie Mae, Freddie Mac, banking institutions, bonds funds, etc (who had also overleveraged themselves) suffered significant loses.
5. The market for mortgages (Mortgage Backed Securities) has dried up with very few buyers, even with excellent clients now qualifying under very stringent guidelines.
6. Loss of faith in real estate has caused prices to plummet to a point that even excellent homeowners with good credit, jobs and income can not qualify for a refinance as the value of their home does not meet guidelines.
DISCUSSION:
1. Real estate forms the very cornerstone of the average Americans net worth.
2. The average American will not start spending to support the economy when they are worried about their home, its value and their mortgage.
3. Bailing out auto dealers will not make people buy their cars when they don’t know what is going to happen to their home.
4. Investors in real estate are necessary as their home purchases support the many “renters” in America and they also need some type of assistance or the tenants will be out in the street.
5. Nothing in the current plan will stop the decline in the housing market.
SOLUTION:
1. Make the interest everyone pays on their home mortgage a “TAX CREDIT” instead of a tax deduction (immediate income into the hands of all homeowners to allow them to continue paying their mortgage). This could be capped at $12,000 to $15,000 per mortgage and still be extremely effective. People would immediately have an extra $1000 per month to help pay their mortgage or BUY THINGS TO GET THE ECONOMY GOING AGAIN. Individuals with mortgages would not have to refinance (which they can’t do very well anyway due to the loss of value in their homes which won’t allow them to refi) and they would still get major relief.
2. Make the interest individuals receive on Mortgage Backed Securities “TAX FREE”. This will cause investors to be more inclined to buy mortgage back securities in light of the newer lending guidelines and their increased yield based on valuing their investment as tax free. Part of the real estate problem is the lack of liquidity and the fact that investors are reluctant to buy mortgage backed securities. By giving the investors (401 k’s retirement funds, individuals, etc) the benefit of tax free yields they will buy MBS’s.
3. Make the Capital Gains on homes purchased after January 1, 2010, “ZERO” if held for at least 3 years (this includes all home purchases to include investment property, personal residence’s, second homes, etc). This should spur home buying by individuals and investors and the rate could be reinstated at some year in the future when America stabilizes. One could argue that the Government will lose money on future gains in the market but if something isn’t’ done there will be no gains to tax anyway.
The solutions will cost the Federal government, to some degree, in lost revenue but it will at least put money right down to the individual that needs it the most (the average homeowner still tying to make his payments), restore confidence in real estate as an investment (people will buy mortgage backed securities’ again), and investors will see real estate as a preferred investment due to the capital gains savings.
If you don’t fix real estate, all other areas of the economy will continue to suffer.
PS: I pulled the calculated cost to the government from the same place that Osama pulls all of his numbers.