Who Aspires To Be a Renter?

Ascencio was speaking to Realtors®, reminding them of the important work that they do day in and day out: helping people and showing them how they, too, can come to realize a part of the American Dream. The rally, May 17, was the culmination of last week's legislative advocacy efforts, during which literally thousands of Realtors® walked the halls of Congress, keeping long-standing appointments with their representatives. They were there to urge support for a variety of measures designed to strengthen the still-fragile housing market and to provide a stable financing system that will ensure access to credit for the millions of "echo boomers" who will be the entry-level buyers of the coming years.

Again and again Realtors® expressed their concerns that the pendulum of reform has swung too far.

No one argues that reform has not been needed. Everyone agrees that loose credit standards and irresponsible - not to mention illegal - lending practices led to a devastating crisis in the housing market, one whose effects continue on today. No one disagrees that thousands of people bought homes - many of them first homes - for which, financially, they were not remotely qualified. Corrections were certainly needed.

But now we are seeing the effects of over-correction. According to Gallup, the homeownership rate has dropped to 62%, the lowest in a decade. Moreover, the number of first-time homebuyers has dropped precipitously, from 50% in 2010 to 37% in 2011. FHA's tightened regulations have disqualified a significant amount of the inventory normally available to first-time and low-end buyers. Moreover, conventional lending standards have tightened beyond reason. Federal Reserve Governor, Elizabeth Duke, told the Realtors® that only ½ of lenders will lend to those who are on the low end of Fannie Mae or Freddie Mac eligibility, even if they have a 20% down payment. This, too, impacts entry-level buyers the most.

Added to all that, it has been noted, the FHFA bulk-sale "REO to rental" program has the effect of removing a significant portion of the inventory that would have been available to low-end and entry-level buyers.

Nobody has said "conspiracy", but the overall effect of these diverse trends points to a housing market much more conducive to renting than to buying. And too few in government seem to be upset about that. When confronted with complaints about the REO bulk-sale program, Mark Stegman, Counselor to the Secretary of the Treasury for Housing, told the Realtors® that there is nothing wrong with being a renter.

And, of course, no one said there was anything wrong with it. It just isn't what people aspire to. It isn't part of the dream.

One of the more interesting speakers to address the Realtors® last week was Democrat strategist and pollster Celinda Lake. Ms. Lake observed that "Voters see homeownership as fundamental to the American Dream," and they see that dream disappearing. 59% said that they think the next generation will be worse off. And what about the housing crisis? 74% say that home ownership is worth the risks. Even 63% of those whose homes were underwater agreed with that. 68% of those who do not currently own a home, want to.

With Congressional approval ratings hovering around 14%, Ms. Lake observed that the sentiment for home ownership far outweighs that for Congress. She encouraged the Realtors® to take their pro-ownership message to the Hill. They did. Enthusiastically.

Bob Hunt is a director of the California Association of Realtors® and is the author of Real Estate the Ethical Way. His email address is scbhunt@aol.com



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