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Three steps to help homebuilding and real estate
June 12, 2013 @ 12:05am | Derek Kilmer
As someone who worked in economic development for a decade, I know the importance of homebuilding and real estate. Both industries were hit hard in our economic collapse and their recovery should be a key part of our overall economic recovery strategy.
There’s some hope that we’re starting to turn the corner. In March, home ownership hit a 17-year low, but year-to-year home prices saw the biggest gain in seven years. And the National Association of Realtors says prices are up in 133 of 150 metro areas.
However, even with those positive signs, there’s a lot of work to do. Among other things, let me mention three things our country needs to do to get the economy — and specifically the real estate and homebuilding industries — back on track.
First, and most importantly to our overall economy, Congress should stop sequestration and pass a budget. I use a technical term to describe these cuts resulting from sequestration — they are dumb. When your business or your home budget is facing financial difficulty, you wouldn’t cut across-the-board. You would prioritize spending and find areas where you can spend less. The cuts under sequestration are not just non-strategic, they are anti-strategic.
What’s worse, with sequestration and Congress’ inability to pass a budget, we haven’t just faced a fiscal cliff — we’re facing a fiscal mountain range. There’s no long-term plan in place for our national budget. It’s fissuring trust and predictability — something local businesses desperately need.
Here’s an example: I recently held a roundtable discussion with 10 Realtors in the area. Of the 10, three of them told me they’ve recently had closings fall through due to concerns about furloughs resulting from sequestration.
This should be Congress’ top priority. In fact, I recently voted for a bill — a bill that a lot of folks in my party voted against — called “No Budget, No Pay.” It said, quite simply, that if Congress doesn’t pass a budget, then members of Congress shouldn’t get paid. Never in my professional career have I ever held a job where I continued to get paid if I didn’t do my job. We need to end the uncertainty caused by dysfunction in Congress and pass a budget.
Second, tax reform is rightly becoming an important piece of the dialogue about how to balance our budget and make our economy more competitive. There are many loopholes that need to be erased from our system, and I know that with sensible reform we can make our system smarter while protecting the middle class and small businesses.
But Congress must be strategic about changes to tax policy and be careful not to throw the baby out with the bath water.
For example, Congress should extend provisions that ensure property owners going through foreclosure, short sales, or loan modifications won’t pay income tax on forgiven loan debt. Also we need to protect the mortgage interest deduction because it is an effective tool for home ownership. And there is value in the Low Income Housing Tax Credit in order to support the continued production and rehabilitation of affordable rental housing.
Finally, we need to bolster real estate lending and address the credit crisis. The time of approving loans to anyone who could fog a mirror is over, but we can’t ratchet things down so much that responsible people can’t qualify. Access to capital is fundamental — for businesses seeking to invest in equipment or expand, and to homebuyers seeking to buy a home. That means the rules that regulate our financial institutions must be sound.
The truth is if we want to get the housing industry and our economy back on track we need an environment that fosters trust and predictability and improves access to capital.
There are plenty of other steps as well — everything from reforms to the appraisal process to efforts to identify more buildable lands.
As a starting point, that means folks in Congress need to stop defining success as making the other party look bad. There are some glimmers of hope on the horizon that this will change. Every Wednesday morning I attend a meeting called the “Bipartisan Working Breakfast Group” where about 20 members of Congress from both sides of the aisle check their snarky talking points at the door and talk about what we can work on to actually create progress for the people we represent.
Now, it’s only 20 people right now. I wish it was 200. But it’s a start.
And it’s important because both parties must work together to pass a bipartisan budget that addresses our long-term fiscal sustainability and ends this era of uncertainty. It’s time to stop the focus on partisanship and start focusing on progress.
Derek Kilmer is the U.S. Representative from the 6th Congressional District in Washington, which includes the Kitsap and Olympic peninsulas and most of Tacoma.
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