Earlier this month, I traveled to Washington to cover a rally. Now, you ask, why would I travel from my home in Orange County, N.Y. more than 250 miles to cover a rally? There have to be hundreds and maybe even thousands of rallies staged in the nation's capital each year that try to bring media attention to a cause or hot-button issue.
However, this was not your typical rally. This was a first-of-its-kind rally staged by the National Association of Realtors (NAR), geared at telling Congress that the real estate markets need help and that calls to limit or do away with the mortgage interest deduction would be disastrous to the still-troubled housing market.
About 15,000 Realtors from across the country dressed in blue t-shirts assembled near the base of the Washington Monument on May 17 to participate in NARís "Rally to Protect the American Dream."
Protest in Washington drew a big crowd.
Speaker after speaker at the event described the real estate recovery now under way as fragile. Talking with local Realtors in the northern suburbs of New York City, they tell me that ample, available for sale inventories, combined with historic low interest rates, have spiked buyer interest. In some markets, home sales are on the rise, while in others it is still difficult to convince the growing number of "tire kickers" to make a buying decision.
However, after five years of a declining home sales market, Realtors are thankful that the "American Dream" is making somewhat of a mild comeback.
Home sales are on the rise and although the latest Pending Home Sales Index released by NAR showed a 5.5% drop in buyer activity, the index still stood at 95.5, more than 14 percent higher than a year ago.
Lawrence Yun, NAR chief economist, stated that despite the dip in the index after three consecutive monthly gains, "The housing recovery momentum continues." He reported that NAR expects housing market activity to produce the best results since 2007. NAR has, in fact, upgraded its housing forecast with existing sales now projected to reach 4.66 million in 2012 and 4.92 million in 2013, up from 4.26 million in 2011.
Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami, told the crowd assembled at the rally:
Realtors know that homeownership is an investment in our collective futures, and we're here today to protect the American Dream of homeownership. Homeownership and investment in real estate impacts families, communities, small businesses, and the nation's economy in a very meaningful way. Today, we're proud to be showing the country that homeownership matters.
Realtors believe that proposals in Congress to raise funds to help reduce the federal budget deficit by limiting or doing away with the mortgage interest deduction would derail the home sales recovery now underway.
NAR is also calling for banks to loosen the reins on what they term are very tight lending requirements on prospective purchasers. In fact, the national Realtor organization notes that if lending returned to what it termed were more normal standards, the 2013 sales outlook for existing-home sales would rise from a little over 4.9 million to 5.3 million.
Katheryn DeClerck, an associate broker with Better Homes & Gardens Real Estate Rand Realty in Warwick, N.Y., who attended the NAR rally, told me:
I don't recall the real estate industry being under such attack as it has been in recent years. Taking a stand for homeownership is critically important. I don't believe that the economy of this country is going to turn around without the real estate industry being a part or leading the way.
The NAR rally was staged during the organization's Mid-Year Legislative Meetings. In addition to its stand on the mortgage interest deduction and greater access to capital for homebuyers, NAR is also recommending reform of Government Sponsored Entities Fannie Mae and Freddie Mac. Specifically, NAR suggests Fannie and Freddie be converted into government-chartered, non-shareholder owned authorities that are subject to tighter regulations on product, revenue generation and usage, and retained portfolio practices that ensures they accomplish their mission and protect the taxpayer.
Other legislative priorities being advanced by NAR include approval of a multi-year National Flood Insurance Program. The House recently passed a five-year bill, but the Senate has yet to approve a multi-year plan. NAR is also continuing to work with Congress to get legislation passed to make the short-sales process more efficient.
In terms of commercial real estate, NAR is lobbying Congress and the federal government to consider legislation and regulation aimed at improving commercial real estate markets that would include: accelerated depreciation, increasing the cap on credit union member business lending, additional banking agency guidance related to term extensions, creation of a mortgage insurance program for performing commercial loans, improved credit availability for small businesses, and creation of a US-covered bond market.
So, as the rally wound down and Realtors dispersed along Constitution Avenue, I realized that while the rally may have helped focus attention on the American Dream of homeownership for a few hours, there continues to be many issues facing consumers today that could possibly deter them from putting money down on a down payment.
For example, talk of tinkering with the Mortgage Interest Deduction has prompted a number of fellow homeowners to tell me that they would simply hand the keys to their home back to their lender if the MID was no longer available. Then there are continuing falling home values, tight lending standards, high gas prices, a still unstable job environment, and a presidential election that pits two very differing economic philosophies.
In other words, all these factors breed uncertainty, which if allowed to take root will undermine any real housing recovery. We are now in the prime selling season for the year. Home sales in the next few months will determine whether this recovery can be sustained.