AT RNC, Policymakers, Housing Experts Talk Future of Real Estate
CLEVELAND–With a real estate developer as its party standard-bearer, it’s no surprise that the Republican Party this week has made real estate and the economy as one of its key priorities.
“Liquidity is extremely important for capital markets,” said Mortgage Bankers Association Chairman-Elect Rodrigo Lopez, CMB, said here during a webcast yesterday at the Republican National Convention. The webcast, Real Estate and the U.S. Economy: a Policy Discussion, was sponsored by The Hill newspaper and the National Real Estate Organizations, of which MBA is a member.
Lopez led a panel discussion with Rep. French Smith, R-Ark., Rep. Bill Huizenga, R-Mich.; and Ed Brady, chairman of the National Home Builders Association.
“Liquidity provides the grease that allows capital markets to operate freely,” Lopez said. “We are currently experiencing a lack of liquidity–not a lack of cash. We believe that excessive regulation is one of the factors inhibiting the markets.”
Markets are resilient, Lopez noted, “But it’s important to have clarity,” he said. “Markets will adapt to intelligent, well-reasoned regulations and provide innovative solutions.”
Smith, a member of the House Financial Services Committee, said a huge liquidity hurdle lies in the commercial mortgage-backed securities market, which faced new requirements under the Dodd-Frank Act.
“The new risk retention requirements seem to consider CMBS on a par with residential home loans,” Smith said. “If you look at the data, you see that risk under CMBS has been de minimus. We think there should be more of a market-based solution.”
Huizenga, chairman of the House Financial Services Monetary & Trade subcommittee, said the playing field for commercial and residential real estate is “clearly different,” but agreed that regulations do little to differentiate.
“On the ground, you have regulators trying to color inside the lines, when they should really be thinking outside the box,” Huizenga said. “It makes you want to shake them and say, ‘wake up’…there has to be a common-sense approach.”
Huizenga said the Choice Act, introduced by Financial Services Committee Chairman Jeb Hensarling, R-Texas, aims to fix some of the barriers he said were created by the Dodd-Frank Act. “Let’s pull [Dodd-Frank] back and address the real issues,” he said.
“There’s a wet blanket on our economy,” Smith added. “You don’t sell real estate if you don’t have people working.”
“Builders love to build,” Huizenga said. “But we have declining purchase power and increased costs…trying to get to that affordability is so key, but there’s a lack of stability.” “When you try to build something and 25 percent of the cost is regulation, you have a problem,” said Brady, a home builder from Michigan, “That’s an affordability issue. We really need certainty. We need access to credit so we can build.”
Brady said to bring private capital back into the marketplace, there has to be some form of an explicit government guarantee. “Our business is a supply and demand industry,” he said. “For every house we build we create three jobs. But we need the tools to build. We ask Congress to take action.”
“Fannie Mae and Freddie Mac were broke then, and they’re broke now,” Smith said. “We need a comprehensive approach to GSE reform and we need it now. Let’s rise to the occasion.”
“Real estate really does lead the economy,” said Rep. Mike Turner, R-Ohio. “Tax policies have to change; lender policies have to change. But I think federal doesn’t provide enough to allow lenders to do their job.”
Turner said he hoped the new Administration in Washington would focus on how to assess communities’ needs. “There is a lot of potential for reform, and we need to focus on reforming these efforts,” he said. “We have to give these communities what they need to address their own needs.”
Ken Valach, CEO of Trammell Crow Residential, said while the demographics for housing are good, “A lot depends on job growth. The job numbers in June were good; the U.S. continues to be one of the bright spots in the world economy. Overall for multifamily, the outlook is very good. But we need more housing in this country; we have a real shortage.”
The webcast can be viewed online at http://thehill.com/video/events/288217-real-estate-the-us-economy-a-policy-discussion-on-2017-beyond.
