Mr President, You Won’t Fix the Economy Until You Fix the Housing Market

J Philip Faranda September 3, 2011

If you haven’t heard of LuAnn Lavine, I’ll tell you why she matters. She was mentioned by Maureen Dowd in her last NY Times column, and has one of the most emailed stories on industry news site Inman News. Last week, Ms Lavine, a real estate broker, got up at a town hall meeting and told President Obama how rough it is out there in the housing market. When he gave a rather vanilla, political answer, she challenged him, respectfully, but told him that short sales and loan modifications were a disaster and that lenders wanted perfection, which seldom occurs in humanity. She spoke her mind. 

I have often thought of what I’d like to say to the President if I had a chance to break bread with him. Here is what I’d tell him:

You will not fix the economy, Mr President, until you fix housing. Fix housing, and the economy will follow organically

The facts on the ground clearly tell me that the housing market remains broken. 
The facts on the ground clearly tell me that the current policy, or lack of a policy, do not work.

The proposed “fixes” by lawmakers make me wonder if they have a clue. The chatter about raising downpayments, lowering conforming loan limits, eradicating the mortgage interest deduction, and other blows to the backbone of housing, which were never causes of the economic downturn to begin with, perplex me. I wonder if lawmakers reside in the same world as I do.

But what do I know? I’m just a real estate broker.

Four years after the sub prime crisis, the government got around to suing the big box banks this week. Their stocks will suffer, and pension funds will drop yet again. This is not the fix. I want a the task force. I want a summit. Nothing symbolic. I want people in whom I have confidence, whose pedigree is results, not politics. I want a housing NASA, which will do what is hard, and do it well. I want an authoritative answer to an earnest real estate broker’s simple question.

This is not a chicken or the egg thing. Employment, consumer spending, and commerce all flow from a healthy housing market. People will not feel confident in their job or see retail business pick up in a vacuum while housing remains stagnant. Fix housing. Think about it when you are in the shower. Talk about it. Take back the dialog from the congressional pablum purveyors and let us know you care. Give us some passion for pete’s sake. Get mad, dammit. 

The president needs to immediately get moving on housing, as JFK would say, with vigor. I want to wake up in the morning and go to bed each night knowing that the president is standing up to the housing challenge the way I knew Reagan and JFK stood up to the Soviets. It’s time to wake up from this 4 year old case of amnesia and pick up the ball again. I’m sick of China this and recession that.

We are better than this. Much, much better.  And I want the Chief Executive to carry himself that way. Let’s go forward, from this time and place, like the resourceful, productive, tail-kicking society we are and say that September 2, 2011 was when housing started its turnaround. We can do this. We can do anything

“Until one is committed, there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative (and creation), there is one elementary truth the ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, then providence moves too. A whole stream of events issues from the decision, raising in one’s favor all manner of unforeseen incidents, meetings and material assistance, which no man could have dreamt would have come his way. I learned a deep respect for one of Goethe’s couplets:

‘Whatever you can do or dream you can, begin it.
Boldness has genius, power and magic in it!’ “

-WH Murray


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