One of the most depressing/astounding/frustrating things about the current race for president has been the complete lack of attention to housing.
The candidates aren’t talking about it. Visit their websites and you’d be hard pressed to find any prominent mention of the topic of housing, mortgage finance or residential investment.
This is despite the fact that a survey released yesterday shows 70 percent of Americans say that housing is an important issue for 2012.
They’ll even go our of their way to avoid the question when its asked, like at October’s Republican presidential debate in Nevada. In the state hardest hit by the housing downturn — with home prices down 50 percent from peak — the crash is a huge issue. When audience members raised the issue, the candidates deflected the issue either responding with canned answers about “letting the markets work” or platitudes (Foreclosures are bad, in case you didn’t know).
Housing is the engine that drives the economy. Housing has lead us out of every economic slowdown since World War II, and most economists agree we can’t get fully come back from the last (and ongoing for most people) recession without a housing recovery.
So why ignore it? The most obvious reason is pure politics. In today’s climate, no Republican can get behind any policy that offers the slightest hint of government intervention.
After all, everything the Obama administration and the Bush administration before it has done in their attempts to boost housing has failed. The only so-called success, the new home buyer tax credit, merely created a false bottom and screwed things up even more.
In all fairness, the answers coming out of the White House aren’t much better. Most recently, the Obama administration announced its latest effort to address housing by attempting to expand the Home Affordable Refinance Program (HARP) to more homeowners. Estimates from government officials are that the program could help up to 3 million homeowners — although less than 900,000 homeowners were aided by the first incarnation despite administration hopes that it would assist upwards of 5 million.
Unfortunately, it’s more of the same. After all, it’s worked oh so well before.
The problem is the banks don’t want to refinance these mortgages. Why give up those high interest rates from people that are making their payments every month?
The biggest complaints about the previous program was the inability of homeowners to get the banks to take any action on refinancing. The government officials overseeing the programs received thousands of such complaints. They’ve got their condition-free bailout and there’s no need to share the windfall.
We need to either stop propping the industry up and pull off the band-aid or go all-in with a major write down plan like that proposed by several leading economists. These half measures aren’t going to get us anywhere.