Jump Start the housing market

As market leaders in the real estate industry, Realogy and NRT are major driving forces both in our local markets as well as on the national stage. Realogy is consistently sought out to weigh-in and provide advice on housing issues and policy. In a recent example of this, Realogy CEO Richard A. Smith was a featured speaker at the prestigious Milken Institute 2009 Global Conference on April 28 as part of a lively panel titled “Jump-Starting the Housing Market.”

During the hour-long panel discussion, Richard stated that while the Obama administration has focused on the foreclosure issue, the solution to the problem is on the demand side. Smith demonstrated Realogy’s leadership by explaining how the government could take stronger action by lowering mortgage interest rates and expanding tax credits from first-time buyers to all homebuyers. Both of those actions would spur home sales activity and thus create a positive overall impact on the economy. The panel was moderated by Fox Business News anchor Brian Sullivan.

Richard’s points during this debate were directly aligned with Realogy’s overall position regarding the economy today, specifically:

Ø Foreclosure mitigation may be the politically/socially correct answer, but the Treasury Department’s own stats show an alarming rate of failure for mortgage loan modifications, with re-default rates on loan modifications approaching 60%. The government’s approach is not working and it is not helping stimulate the economy.

Ø Housing and housing related services are 21% of the U.S. Gross Domestic Product (GDP). Our government needs to address the economy by focusing on housing first with stimulus actions aimed at the demand side.

Ø First-time homebuyer tax credit is having a positive impact, although it is limited. For a true stimulus for housing and the economy, the government needs to broaden the first-time homebuyer tax credit to ALL qualified home buyers AND increase the tax credit to $15,000 from $8,000 (this was in the Senate bill but didn’t make it into law in February). We would also like to see income limits removed from eligibility standards and want this to remain as a refundable credit. Apply the tax credit more broadly to a larger segment of the home-buying population and increase the incentive and we believe this would stimulate home sales.

Ø Need to address the volatility in the mortgage/housing marketplace with a government-sponsored program to fix 30-year mortgage rates at 4.5% or lower for a limited period of time (e.g., 12 months). A government guarantee of a fixed rate ceiling would create a sense of urgency among qualified buyers under today’s more stringent lending standards and get buyers off the fence and into the market. The fixed rate program wouldn’t really impact prices -– affordability is expected to remain at current high levels until inventory comes down significantly -– but it would impact home sales in a positive manner.

Ø A housing recovery would have a positive “waterfall” effect on the overall economy: NAR estimates that each individual sale of an existing home at the median price generates approximately $63,000 of economic impact.

Ø Taken together, we believe these steps would help increase consumer confidence – establishing a degree of certainty in mortgage rates will go a long way toward unleashing pent-up demand for housing

Ø Bottom line, the housing issue is of utmost importance to fixing the economy.

I know you have heard it from me before, but I can not overstate the importance of making the effort to contact your local governmental representatives to get these viewpoints across. While these opinions may strike some as self-serving, taking these steps is essential to the accelerated recovery of the economy. That is a goal that serves everyone.