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Housing Summit Wrap Up

By: Jason Gold / 10.11.2012

America’s stricken housing markets appear to have hit bottom, as home prices rise modestly in many areas across the nation. Now is the time to reduce government’s overwhelming dominance of home lending – Washington guarantees more 90 percent of all new home loans – but don’t expect Congress to decide the fate of mortgage giants Fannie Mae and Freddie Mac next year. And the mortgage interest deduction may be one of those tax loopholes that everyone is talking about closing, but that would deal a blow to housing markets just as they are finally showing signs of life.

Such were the main takeaways from a major, bipartisan housing conference at the National Press Club co-sponsored by the Progressive Policy Institute and the American Action Forum.

Kicked off by the Secretary of Housing and Urban Development, Shaun Donovan – with a vigorous defense of the administration’s handling of a housing market that faced historic challenges the past four years. Donovan argued, “Despite the fact that our progress has not been made in a straight line, it’s clear that housing is stronger than most expected it to be at the time when the president took office. There were challenges along the way. But today housing is in a significantly better position, by this measure, home prices, than most economists and market analysts expected at that time.”  The secretary also called on Congress to pass the broad refinance Menendez-Boxer bill. PPI has been, and continues to be a strong advocate of this proposal.

Experts sounded the alarm that that large-scale action was necessary in the next Congress, not only to decrease the size of government’s role in the housing market but to give some clarity to private capital to participate for the future. While Doug Holtz-Eakin noted that there has been some consensus building behind the scenes in Congress, he cautioned that “, Only the White House can make that step (on GSE reform). Professor Chris Mayer from Columbia Business School agreed, but pointed to the November elections, “it does matter” who is the next president because Mayer believes the two candidates have very different policies and that “FHFA becomes the place that sets de facto policy without Congressional guidance.” The panel backed Donovan’s plea to pass Menedez-Boxer, with the exception of Holtz-Eakin who said we’ve got enough housing programs.

With the nations “fiscal cliff” looming, the mortgage interest deduction set off a raucous exchange by Mark Zandi of Moody’s Analytics, who called for the housing industry to lead the way by promoting reduced limits on the $90 billion annual housing subsidy. Jerry Howard, CEO of National Association of Homebuilders, responded with a passionate defense that the industry could not weather any more hits in addition to the tsunami of upcoming regulation.