President Obama had a busy start to the month. On Tuesday, August 6, 2013, he spoke in Phoenix about the state of the housing market and what he proposes moving forward. The next day, Wednesday, August 7, 2013, he participated in a Question and Answer session with Zillow CEO Spencer Rascoff. The questions were selected from thousands of submissions via social media and ran the gamut from interest rates, starter homes, areas hit hard by the recession, affordable rentals, scaling back Freddie Mac and Fannie Mae and more.
In his speech on Tuesday, President Obama said, “Thanks to the grit and resilience of the American people, we’ve cleared away the rubble from the financial crisis and begun to lay a foundation for stronger, more durable economic growth.” He laid out a five-step plan for how that foundation can be laid.
1) President Obama wants Congress to pass a “bipartisan idea” to allow homeowners to save thousands of dollars a year by refinancing their mortgages at today’s rates. During the Q&A session, he expanded on this idea by suggesting that keeping interest rates low will keep the economy moving in the right direction, which will feed back into the housing market by increasing the value of homes. The president said he is hopeful that Congress will move in this direction, because, “there have been Republican and Democratic Senators who have been in conversation about how do we learn from the lessons of the past and start building a firmer foundation for housing going forward.”
2) President Obama wants to make it easier for qualified buyers to buy homes by simplifying overlapping regulations and cutting red tape for those families that have been rejected by banks for mortgages in the past. One way that the president hopes to accomplish this step is through the Consumer Finance Protection Bureau (CFPB) simplifying the mortgage process as soon as this fall. He expanded on what he means by that in one of his answers, when he explained that the CFPB will be cutting down on fine print to increase the transparency of mortgages. President Obama said, “The more knowledge consumers have the more empowered they’re going to be and the more likely they’re going to be to live out the American dream that I think all of us want to see, not just for ourselves but for our kids and our grandkids.”
3) President Obama acknowledges that this next step doesn’t seem to affect the housing market, but he wants to fix the broken immigration system. Expanded upon during the Q&A session, he said, “We know that if we get immigration reform done then suddenly you’ve got all kinds of families coming out of the shadows, paying taxes and penalties, but they’re also going to be really likely to buy homes in some of the neighborhoods where you have the most foreclosures currently. They [immigrants] add value to a community, increase property values and, over the long term, one of the reasons why it’s estimated that immigration reform would actually add a trillion dollars to the overall economy.” A bipartisan bill on immigration reform has already passed the Senate and will go before the House when Congress is back in session in September.
4) President Obama wants to address uneven recovery by rebuilding communities hit hardest by the housing crisis and put construction workers back to work. The president acknowledges that, “the housing market has continued to be fairly robust. There’s been reporting just this week that some of the data has come in showing that we’ve seen some good, steady growth, but I think all of us recognize that it is still a soft housing market in part because there’s still a soft employment market.” He also concedes that some areas may need more hands-on help and counseling for homeowners moving forward to bring about further recovery, especially to improve middle class security.
5) President Obama wants to invest in affordable rental housing for those who aren’t ready to buy a home or can’t afford one yet. “One of the components is also making sure that we’ve got more resources to construct or get on the market more affordable housing,” the president said during the Q&A. “Part of what happened during the housing bubble was that people who probably should have been renting were encouraged to go out into the housing market and when they got hurt the economy as a whole got hurt.” He plans to work with cities and states down the road to address local barriers that may presently be driving up rental prices.
Now that you’ve heard President Obama’s five-step plan for continuing to improve the housing market, what are your thoughts? Do you believe it will help, and can be implemented?