By Robert Freedman, senior editor, REALTOR® Magazine
With the housing recovery still fragile, it’s hard to look ahead with anything but caution. However, the long-term prospects for the market are “incredible,” FHA Commissioner David Stevens told REALTORS® yesterday in the opening forum of the 2010 NAR Midyear Legislative Meetings & Trade Expo.
Young households today represent a demographic block larger than even the baby boomers, and their entry into the housing market promises to help build “an incredible real estate market in the future,” said Stevens. But first the housing market must move from recovery to stability and then to long-term growth, and that will only happen if investors regain confidence in the mortgage market. And for that to happen, the mortgage market must be reformed to reward transparent financing structures.
Stevens credited NAR’s role in helping Congress and the administration stabilize the market through its support of a “mosaic” of pragmatic policies, such as:
• The Federal Reserve’s $1.25 trillion dollar investment in Fannie Mae and Freddie Mac mortgage backed securities, which helped keep interest rates historically low.
• The home buyer tax credit, which has so far been taken by 2.2 million households for $16 billion in total returns
• The federal government’s foreclosure prevention efforts, which have helped 1.1 million households.
That mix of programs has led to today’s housing recovery but the job won’t be finished, he says, until the federal government steps out of the picture and the market stands on its own. “We constantly talk about exit strategy,” Stevens said, referring to the administration’s goal of unwinding its mortgage-market interventions.
To help protect the recovery, Stevens urged REALTORS® while they’re in Washington this week to convince lawmakers to pass FHA reform legislation under consideration in the House as soon as possible. That legislation, H.R. 5072, would enable FHA to lower the upfront mortgage insurance premium and instead fold a higher annual premium into the loan, a change that would align FHA with the approach used in the private sector. The legislation would also give FHA more tools for clamping down on bad lenders.
The changes in the mortgage insurance premium are needed to help FHA improve its financial picture and restore its reserves to its congressionally mandated level. Not having the authority it needs to change its premium structure “is costing FHA $300 million a month in money it’s not getting,” he said.
“You are the recovery,” he told the packed room of REALTORS®. “Now we’ve got to finish the job.”
[...] This post was mentioned on Twitter by REALTOR® Magazine, Christie Aberson, NAR Info Central, eSTORM Real Estate, Maurice Hayes and others. Maurice Hayes said: RT @realtormag: FHA Commissioner David Stevens says "incredible" real estate market is ahead. http://tinyurl.com/33xwoxz [...]
This is a great article. As a realtor, it keeps me optimistic about the future of our industry.
This is all great but we really need to work on what it takes for when the Realtor does their job which is bring a buyer to the table and then attempt to get financing for that buyer. This part of the process is a real issue to getting from recovery to stability then long term growth.
In a 2nd home/resort market place, I am a very positive thinker and see our market trying to make a turn around for the better. But with the hope of what FHA Commissioner David Steven said, we are having major problems with loans not being approved and appraisals of the properties that are under contract not appraising for their real value in any one market. Also HVCC is causing issues with the enforcement of having appraisals done by appraisers outside the areas of their expertise. If they don’t trully know the local market then how can they provide a true appraised value of a property. These issues need to be addressed and fixed before we can see a REAL recovery ahead. The pendulum has swung to far and needs to be corrected.
[...] calling the long term prospects for the real estate market “incredible,” according to NAR. Pointing to young households as a demographic that is growing larger than the baby boomer [...]
There are presently 3 primary solutions to stability in the housing industry. Unfortunately only one of them has a proven track record. History has proven the others to be nothing more than a temporary ruse. I’m sure each can figure it out for themselves.
1) Continue in the direction of the socialistic agenda that is spewing out of the White House like bad breath from a homeless wino. Unfortunately, in a socialist state, those who feel disadvantaged are given ample opportunity to take advantage of the system and drag the rest of us down with them.
2) Give the court system “police state” power to create cramdown loan modifications to stem the tide of foreclosures. Don’t sprain your arms patting yourselves on the back folks. It ain’t over yet.
3) Let the free enterprise system do it’s thing. It is the most successful economic system in the history of mankind. It is intensely painful to stand by and watch it systematically destroyed by those with small greedy minds.
Before the relaxation of lending standards to ensure the success of the idiotic Washington proposed agenda of raising home ownership from the 40 year standard of 65% +/-, to a ridiculously optimistic 85%, the qualifying guidelines for mortgages was 3 times the gross household annual income. It worked well, but we all know Washington’s historic tendency to take anything that works well to “fix” it. The only way to get there from here was to relax lending standards. And here we are today.
Years into the mess our so called leaders have created, afloat in a hurricane tormented sea, hanging on every microscopic positive economic index indicator as if it were a life raft appearing; looking for ways to fix the newest mess created by the sleight of hand so called solutions viewed through a maze of smoke and mirrors. The problem with FHA is it that it made too many sub-prime loans in the last couple of years. Defaults are cropping up like weeds and it is collapsing, hence the hike in up front mortgage insurance premiums and the sure to come increase in monthly MI. Deja Vu all over again.
Skeptical? Take an economic pulse in your own neighborhood folks. Is the average (not median!) house value (not sale price!) equal to 3 times the average (not median!) household income? That’s where we need to be to earn the right to say we have recovered. If not, what are you going to do about it? Create more transactions like an account churning wall street stock broker? I suppose attempting to line your own pockets in an attempt to avoid the equalizing effects of a socialist regime will keep you occupied , like a hamster in a wheel, for a time. What then? Your agenda should be to take whatever steps necessary to ensure that we reach true recovery, not that we line our pockets by creating transactions that will result in more foreclosures so big government can come to the so-called rescue.
Human greed, that was the root of this problem in the first place. I dare say that human greed is the root of every problem known to mankind. The coupling of a democratically ruled republic living within the bounds of a free enterprise economic system has been the only long term solution I am aware of. Have a better solution?
Bring back the Republic! Support free enterprise!
I am as enthusiastic as the next guy or gal in real estate. While I admire David Stevens optimistic appraisal of our current situation, I am of the belief that we are still going to be mired down in red ink as long as we continue to maintain a disjointed and stilted financial system. Defaulting mortgages is as common as apple pie here in the US. Our neighbors to the north have a more disciplined approach to lending. You can’t buy a house in Canada without providing a substantial down payment and proof of income. They have virtually no Loan Mod or Short Sale to speak of.
While we are considering how to get ourselves out of this mess we should look at what works. Fiscal responsibility on both the buyer and banks behalf could go a long way to fix our “house”. Our leaders need to get their heads out of…..the clouds and down to earth where the homes are.
As I read the last comment, I think about the deviscive tactics that have overwhelmed our civil discourse. I think that the government, both the previous administration and the current have done the best that they can in light of the severe economic catharsis we have experienced in the last three years. Blasting these efforts as a Socialist agenda shows displaced anger and a lack of understanding of what Socialism means as a economic system. Here is a short definition:
“noun
1.a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole. ”
Clearly the purchasing of GM stock could be pointed to as a “Socialist agenda”. Those of you selling in the mid-west know that when a major car manufacturer starts to disintegrate, the economic stress would have put your area into a true depression.
Take a moment and think back to late ’08 and early ’09 when things looked the darkest. Imagine how much worse this could have been without creative intervention. Massive layoffs in the 30 to 40 % could have been possible with massive foreclosures and a drop in housing prices that would have matched the prices in Detroit.
That regional stress could have put the entire country into a Depression with a capitol “D’. Buying the stock instead of just giving them money was a creative way to help one of our iconic economic workhorses. MANY non-socialist countries support thier countries’ major companies to the detriment of our competitiveness globally.
Our government did the right thing and saved many jobs in the interim. Was it right for the government to buy stock and bail out banks?
The last I heard was that as the banks repay our TARP money, we are coming out ahead of the game. True Capitalism with a capitol “C” if you ask me.
Changing a major economy’s direction 180 degrees is akin to turning a battleship direction. We are slowly improving and we should be positive rather than negative.
Ranting about White House policies and referring to them as “socialistic agenda that is spewing out of the White House like bad breath from a homeless wino” does little to offer solutions and gives us little encouragement in spite of the positive changes we are seeing.
While I value disagreement with my personal views, I find it discouraging to have Tea Party rhetoric posed as thoughtful commentary.
Fort Myers Florida single family home prices appear to have stabilized. Sellers are getting more confident a recovery is around the corner and buyers are losing the edge they had when sellers saw only a downward spiral.
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The key to the message is for all to realize that this a great industry with a strong future ahead, but only after we complete the job here. Conveying optimism for the long run but juxtaposed against the fact that we still have work to do: That was the goal.
The Tax Credit was a great tool for pushing Firsttimers into homes, but we’re experiencing a Shadow Market and sellers don’t understand. I wonder if there will be another tax credit?
[...] To give him a fair shake, if you have not read it, read it here [...]