- The Washington Times - Friday, January 16, 2009

Real estate professionals are urging President-elect Barack Obama to take immediate and bold steps to cure the current housing crisis. Still reeling from falling home prices, record foreclosures and a tight credit market, many in the real estate business are hoping for change in the new year and wonder what an Obama administration will actually mean for real estate and housing issues.

Mr. Obama campaigned on making the housing industry one of his top priorities and acknowledged that, during the past two years, most homeowners lost 20 percent of the value of their homes or more. He spoke about wanting to help homeowners pay their mortgages, stay in their homes and avoid painful tax increases.

Furthermore, he has said that he will instruct the secretary of the Treasury and the secretary of Housing and Urban Development (HUD) to move more aggressively to modify the terms of mortgages, enact a 90-day foreclosure moratorium for homeowners who are acting in good faith, create a universal mortgage tax credit, ensure more accountability in the subprime-mortgage industry and mandate accurate loan disclosure.

Industry insiders such as Barbara Owens, broker and owner of Lady With the Hat Real Estate Center Inc. in Manassas, are eager to see a change. She says, “I think that we need to inject our real estate industry with some realistic prescription dosages that work at the sources of the infection, not just a Band-Aid that is thrown away after one use.”

Ms. Owens would like to see some sort of bailout for the homeowners who have been faithfully paying their nonappreciating mortgages through the years.

“It would be great if the Obama administration helped existing homeowners with a mandatory reduction of the existing mortgages by the banks to match the comparative market value of their loan in today’s resale market,” Ms. Owens says.

This action would stimulate homeowners with an incentive to continue to pay for their homes and allow for homeowners to start building some appreciation in their homes and “not to just walk away from this depreciating cancerous investment,” according to Ms. Owens.

Joseph Himali, president of the Greater Capital Area Association of Realtors, believes that in this day of foreclosures and short sales, the banks are the main issue. “The number one issue Realtors are running into is that it’s very difficult to process and get those transactions to go through.”

He believes that the best thing that could happen is “to get the banks to acknowledge what the market is, clear the bad loans and allow the market to function.”

At present, the housing market is anything but functional, Mr. Himali says. “Even when you finally get somebody to buy and sell, the bank will sit on the transaction for months and not respond,” he says. “In the meantime, the market has declined a little bit more, the house is worth less and the buyers want to renegotiate…. If we could get the banks to start responding in a timely manner, we’ll be able to clear the inventory and turn this market around.”

Mr. Himali says another thing that would be helpful to the high-priced Washington region is to change the conforming and superconforming loan limits that are set so low that it’s difficult to sell properties that are $800,000 or more.

“It may not seem as much as a big deal, but if you’re working in the inner suburbs or inside the city, $800,000 doesn’t buy you a whole lot.” He adds that people in lower-priced houses can’t move up because they can’t get a loan, so they’re not selling.

“This means there are no buyers, and it’s killing the market, which again comes back to the banks; they are so dysfunctional and the loans are so difficult.”

Growing foreclosure rates also continue to plague the country, as well as the Washington region, as more homeowners are having trouble making their mortgage payments.

Mr. Obama told Realtor magazine this fall that he wants to create a $10 billion foreclosure-prevention fund that works in tandem with state, local and community nonprofit efforts to help households facing foreclosure renegotiate with lenders or put their homes on the market.

Analysts with the National Association of Realtors (NAR) found that the Obama administration and the new Democrat-controlled Congress will likely focus on regulatory reform of the financial-services industry.

Mary Beth Coya, senior vice president of government and public affairs with the Northern Virginia Association of Realtors, hopes that Mr. Obama will focus on the NAR’s stimulus plan that includes conforming loan limits for areas with high housing cost, a federal buy-down of mortgage interest rates and a homebuyer tax credit.

She agrees that getting the foreclosed homes off the market is key. “Once you start seeing the foreclosures selling and seeing people able to adjust to their mortgages and pay those with some assistance, that will make the whole market even out, and things will get back into a healthier economy,” says Ms. Coya.

First-time buyers are also feeling the pinch of the current housing crisis, and Ms. Coya believes that the homebuyer tax credit is one of the proposals that will help homebuyers get into the market.

Ms. Owens says that Congress should consider expanding a consumer tax credit by expanding the first-time homebuyer’s tax credit along with a government buy-down on their rates to help them with their purchases. “This will spur the buyers that are sitting on the fences with great credit and no money … .”

She adds that this is one of the best times to purchase a home that she has witnessed in her 23 years of being in the real estate industry.

Even if new proposals and policies take time to have an effect on the market, Mr. Himali says that the change in the administration and Congress, in and of itself, has an effect on the District and inner suburbs market because people are looking for housing.

“What really affects things in the marketplace is not just the appointees, but it’s all the consultants, lobbyists, nongovernmental organizations and the various hangers-on from the administration,” says Mr. Himali.

Mr. Himali says that the market will be spurred by people who want to have a piece of the city and be close to power that he says translates into a couple thousand transactions. “By themselves, that might not seem like a lot, but in certain submarkets like Kalorama, Georgetown, DuPont, Chevy Chase, Bethesda, Arlington, and inner Montgomery and Prince George’s counties, those areas are going to see more folks wanting to live there.”

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