There’s been some big changes in the United States government, culminating in the election of our new president Barack Obama. But what does our new leader mean for the real estate industry? Is it status quo or are there big changes coming? Is President Obama a good thing for the real estate industry or a bad thing? Who benefits the most from these governmental changes: real estate practitioners, buyers, seller, investors, or developers?
An important note to be aware of is that not only did a Democrat win the general presidential election but there were also major gains by Democrats in the United States House of Representatives and Senate races.
“We’re in a good place,” says National Association of Realtors (NAR) President Charles McMillan. “Realtors are excited by this historic election and stand ready to work with our new president and the new Congress on issues that are at the heart of the American dream of homeownership. There is no partisan divide when it comes to homeownership, strong communities, affordable health insurance, and strong commercial real estate markets. We see much opportunity as well as challenge in this new environment.”
It is clear that the National Association of Realtors had their preferred candidates, in fact more than 400 candidates were provided more than $4 million dollars in monetary support. Of these candidates, 90% won their respective elections. More than half of Realtors Political Action Committee (RPAC) funds went to Democrats. However, RPAC Chairman Larry Edwards was quick to point out that “ours is the most bipartisan PAC in the country.”
Apart from this $4 million to selected candidates, another several million went to 74 candidates with the NAR Opportunity Race Program and 6 candidates with the Independent Expenditure program – in all, totaling an estimated $16 million dollars in the two-year cycle ending with the November 4th elections. NAR President Charles McMillan commented on these elections that “thanks to the success of RPAC and the attraction of our issues in both parties, we are well positioned to ensure the best environment for real estate.”
If a candidate is supported by the NAR Opportunity Race Program then that candidate will have education and rock-the-vote type promotional materials sent out for them by snail mail in their own district. If a candidate is supported via the Independent Expenditure program then this candidate will have radio, television, and direct mail advertisements sent to the general public in their district focusing on real estate issues relevant to the industry.
Some of the NAR supported winners include:
- Rep. Paul Kanjorski (Democrat – Pennsylvania) - Authored the Community Choice in Real Estate legislation and has been a supporter of NAR’s effort to take (and keep) banks out of real estate.
- Rep. Shelley Moore Capito (Republican – West Virginia) – Has assisted in the passing of FHA reform, expansion of homeownership opportunities for military veterans, and homebuyer tax credit. Member of the House Financial Services Committe that has been an advocate for small-business health insurance coverage backed by NAR.
- Rep. Jerry McNerney (Democrat – California) – Advocated FHA reform, expansion of homeownership opportunities for veterans, and played a role to increase conforming loan limits.
Analysts state that they believe that the Obama administration will focus on regulatory reform of the United States financial services industry. There’s going to be some major investigations going on as to what has to change in order to have proper regulation of mortgage and asset-backed securities. There’s going to be a major focus on exactly what changes need to be made to the two big government sponsored enterprises: Fannie Mae and Freddie Mac, also known as the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC), respectively. Some of the options for Fannie Mae and Freddie Mac include making them 100% private companies, folding them into the government or continuing with them but as public-private hybrids.
Another economic stimulus package is likely in the works under the Barack Obama administration and in the U.S. Congress. Beyond this, I know that NAR is pushing for permanent conforming high-cost loan limits of $729,750 as well as eliminating the repayment requirement in the first-time homebuyer tax credit. NAR is also pushing for increased consumer protection with a permanent ban on any national banks going into real estate brokerage and management. NAR also wants to make sure that Wall Street banks use at least part of that $700 billion in bail-out money to have mortgage financing available at a reasonable cost to consumers.
Congress will undoubtedly be pushing for infrastructure investment, increased environmental awareness, and health insurance reform.
What’s your opinion on these elections – will these changes improve or sink the real estate market?