Is Washington driving housing’s pessimistic mood?by Tim Manni
We’ve written a couple posts that have questioned the idea that the majority of Americans should be homeowners as opposed to renters. We’ve asked readers to question whether it’s time to reconsider what it means to accomplish the American dream. In fact, one of our first posts on the subject was titled “Is renting the new American dream?“ We titled a later post “Is the American Dream turning into the American nightmare?”
The bursting of the housing bubble and the subsequent recession has really caused homeownership, and all it entails, to leave a bad taste in the mouths of many. Once their biggest investment went sour, homes went from sanctuaries to prisons in as little as a few months, so much so that some homeowners have simply walked away from their mortgages.
As much as we have called into question the idea of homeownership for all, we have also reminded readers of all the benefits associated with owning, especially during this era of low mortgage rates and cheap real estate. If it seems like we have flip-flopped in our opinions, we apologize. Simply, we were trying to see the issue from both sides.
It’s hard to get away from the overwhelming skepticism and pessimism surrounding the present and future state of the housing market. Studies, surveys, articles and reports have all highlighted the challenges facing the market, adding to the atmosphere of negativity. Just this morning I read about a recent survey that found that real estate professionals are significantly more pessimistic than homeowners about the future direction of home prices.
A recent TIME magazine cover story plainly revealed what they think about owning a home. “Homeownership has let us down,” is the very first line of the article. There’s absolutely no sugar coating of opinions there, and it is a sentiment no doubt echoed by many people.
While the pessimistic opinions of many are well documented, some of us are wondering, “Who’s driving these negative opinions?” If homeowners are less pessimistic about the market than real estate professionals are, if the majority of homeowners maintain that walking away from your mortgage is still “unacceptable,” why do the headlines continue to be so bleak?
I believe at least a portion of the skepticism in the housing market is being driven by Washington. Changing policies, regulations and wavering support for at least the concept of homeownership has created such a level of uncertainty in the market, that even real estate professionals are saying to themselves, “Where do we go from here?”
A changing political landscape?
The very entity that championed the idea of homeownership for decades, creating countless policies to encourage and preserve homeownership, seems like it’s now the force that’s trying to scale it back.
That’s part of the argument I read in a post this morning titled “Like it or not, you’re all political analysts now.” The blogger — known as “The Notorious R.O.B” — writes:
Fact is, there is not a single aspect of real estate that is not impacted — and heavily so — by government policy. This industry is a regulated one that exists in its current form only because of government policy.
The world of real estate has always revolved around government policy; federal, state and local. If all of the sudden the leaders in Washington are reconsidering the “American dream” and not championing the virtues like they used to, optimism fades or is replaced by more pessimism. This means fewer home sales, fewer mortgages and fewer jobs for those who depend on them.
This is not to suggest that no one is going to buy homes in the future. Nor is it to suggest that realtors should just climb under their bedcovers and wait for death to arrive. The market will change and adapt, as markets always do, to government policy. The smart brokers and agents will figure out a way, and the rest will find other employment in other fields.
You’re a political analyst
R.O.B. writes that for those in the housing industry who can stick around, “must today become an amateur political analyst.” That means, trying to discern which way the political winds will blow, and how much influence and emphasis the government will provide in the future. Even the National Association of Realtors Chief Economist Lawrence Yun admitted recently, “As with any sectors in the economy, it is very unhealthy to be dependent on government help for a long period.”
Given Washington’s grip on the housing and mortgage industries, it looks like real estate professionals have no other choice but to be dependent on the government, at least for now, but seem to be in a situation of declining support and a more uncertain future.
While those in the industry rode the waves of pro-housing political policy for decades and decades, it seems as though they should be getting ready to possibly deal with the opposite. However the markets work out, it’s clear that R.O.B. is dead on when he suggests that — if you’re in the industry — you’re forced to be a political analyst, whether you like it or not.