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Crisis In The Housing Market
Housing Crisis A Hot Topic For Presidential Hopefuls
Originally published on Mon October 24, 2011 7:03 pm
Home prices across the U.S. have dropped 30 percent from their peaks, a downturn that has sapped trillions of dollars in wealth from Americans. Not surprisingly, it's a hot topic for presidential candidates this campaign season. But so far, new ideas about how to fix the crisis have been scarce.
On Monday, President Obama is visiting Nevada, where he's expected to announce his administration's latest proposals on housing. The state is at the epicenter of the downturn, with the latest reports showing home prices and sales numbers continuing to slip.
Republican presidential hopefuls also visited the state recently — for last week's debate in Las Vegas, where the housing crisis did come up. But despite the fact that it's a huge issue — not just in Nevada but for the whole U.S. economy — the GOP candidates haven't said much about what their housing policies would be.
When the question was raised about how to fix America's real estate and foreclosure problems, few concrete proposals emerged. Texas Gov. Rick Perry, it turned out, didn't answer the question; instead, he got into an argument with former Pennsylvania Sen. Rick Santorum over whether or not he supported the so-called TARP bank bailout.
Minnesota Rep. Michele Bachmann said she empathizes with struggling families.
"When you talk about foreclosures, you're talking about women who are at the end of their rope because they're losing their nest for their children," Bachmann said. But no specific policy ideas materialized in her answer.
The most specific answer probably came from former Massachusetts Gov. Mitt Romney, and he seemed to say he wouldn't do much specifically targeted at the housing market. He essentially said the actions on the part of the government have not worked.
"The right course is to let markets work, and in order to get markets to work and to help people, the best we can do is to get the economy going," Romney said.
Romney has also said the government should not try to stop the foreclosure process; instead, the process should be allowed to run its course, so the housing market can hit bottom and then recover.
Businessman Herman Cain echoed Romney's remarks.
"We need to get government out of the way," Cain said. "It starts with making sure that we can boost this economy and then reform Dodd-Frank, and reform a lot of these other regulations that have gotten in the way, and let the market do it just like Mitt has talked about."
Cain went on to say that the Obama administration's housing interventions certainly haven't fixed the biggest problems, as home prices continue to drift.
But the president's foreclosure prevention program so far has allowed around 800,000 homeowners to get lower-interest-rate loans and stay in their houses. Critics on the left say the program could have reached many more — 3 million to 4 million people.
And Obama has more proposals in the works.
"One of the things that the president has his economic and housing team working very hard on right now is a refinancing plan," said Gene Sperling, the top White House economic policy adviser.
The basic idea is that many homeowners can't qualify to refinance at today's low rates. If they could, many would save hundreds of dollars a month on their mortgages.
"[The goal is] to come forward with a plan to help millions more families be able to refinance," Sperling said.
He said the administration is also implementing a program to allow unemployed people to defer making mortgage payments for a year.
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And later today, President Obama heads West as well. He starts his visit in the foreclosure capital of the U.S. Nevada is ground zero for the housing downturn and it's an important swing state. The latest numbers on housing out last week showed that home sales fell last month and so did home prices, down three percent from a year ago.
NPR's Chris Arnold has been looking at how the administration is trying to help, and what the major Republican candidates say they would do differently.
CHRIS ARNOLD, BYLINE: Home prices nationally are down 30 percent from their peaks. That sapped trillions of dollars in wealth from Americans. It's hurt consumer spending and confidence. Meanwhile, the country's lost more than a million jobs in home-building and related industries. And nowhere is this wreckage worse than in Nevada. So when Republican candidates came to this state just last week, it's no surprise that this issue came up in their debate.
(SOUNDBITE OF CHEERING)
ANDERSON COOPER: I'm Anderson Cooper in Las Vegas. Tonight, the presidential candidates come here to win the West.
ARNOLD: So far, the Republican candidates actually haven't said much about what their housing policies would be. That's despite the fact that this is a huge issue, not just in Nevada, but for the whole economy. So this question, during the debate, at first promised to give a rare glimpse at their thinking.
UNIDENTIFIED MAN: Yeah, my question is, those of us who own property here in Nevada have been devastated by the real estate bubble. What would you do, as president, to help fix the overall problem of real estate and foreclosures in America?
ARNOLD: But Republicans offered little in the way of concrete proposals to help struggling homeowners or the housing market over all. Texas Governor Rick Perry it turned out didn't answer the question. He got into an argument with Senator Rick Santorum over whether or not he supported the so-called TARP bank bailout. Congresswoman Michelle Bachmann said that she empathized with struggling families
COOPER: Congresswoman Bachmann, does the federal government have a role in keeping people in their homes, saving people from foreclosure in the state of Nevada?
REPRESENTATIVE MICHELE BACHMANN REPUBLICAN, MINNESOTA: When you talk about foreclosures, you're talking about women who are at the end of their rope, because they're losing their nest for their children...
ARNOLD: But if you were expecting any kind of specific policy idea to wrap up this answer, it didn't materialize.
MINNESOTA: President Obama has failed you on this issue of housing and foreclosures. I will not fail you on this issue. I will turn this country around. We will turn the economy around. We will...
ARNOLD: The most specific answer probably came from former Massachusetts Governor, Mitt Romney. And he seemed to be saying that he wouldn't do much at all, that's specifically targeted at the housing market.
MITT ROMNEY: The idea of the federal government running around and saying, hey, we're going to give you some money for trading in your old car, or we're going to give you a few thousand bucks for buying a new house, or we're going to keep banks from foreclosing if you can't make your payments, these kind of actions on the part of government haven't worked. .
The right course is to let markets work. And in order to get markets to work and to help people the best we can do, is to get the economy going.
ARNOLD: Romney elsewhere has said the government should not try to stop the foreclosure process - rather it should be allowed to run its course, so that the housing market can hit bottom and then recover.
Republican candidate Herman Cain echoed Romney's remarks.
HERMAN CAIN: We need to get government out of the way. It starts with making sure that we can boost this economy. And then, reform Dodd-Frank and reform a lot of these other regulations that have gotten in the way, and let the market do it just like Mitt has talked about.
ARNOLD: Whether or not the Obama administration's housing interventions worked depends on what you mean. They certainly haven't fixed the biggest problems. Home prices are still drifting lower, for example. So, on that score, you might say the efforts haven't worked. But the president's foreclosure prevention program, so far, has allowed upwards of 800,000 American homeowners to get lower interest rate loans and to stay in their houses.
Critics on the left say that the program could have reached many more, three to four million people. But it did work for 800,000 people. And the president's proposing more programs.
Gene Sperling is the top White House economic policy advisor.
GENE SPERLING: One of the things that the president has his economic and housing team working very hard on, right now, is a refinancing plan.
ARNOLD: The basic idea there is that many homeowners can't qualify to refinance at today's low interest rates. If they could, many would save hundreds of dollars a month on their mortgages. So Gene Sperling says the goal is...
SPERLING: To come forward with a plan that could help millions of more families be able to refinance.
ARNOLD: Sperling says the administration is also implementing a program to allow unemployed people to defer making mortgage payments for a year.
Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.