Obama- Housing Market Is Beginning to Heal…
Obama: 'Housing Market Is Beginning to Heal...Home Prices Rising at Fastest Pace in 7 Years'
By Zoe Eisenberg
Shutting Down Fannie, Freddie Part of President’s Plan to Keep Housing Humming; Announces Mortgage Finance Overhaul at Phoenix Event
With the real estate industry soaring hotter than an Arizona August, President Barack Obama visited Phoenix Tuesday to address the recovering state of the U.S. housing market.
The president, speaking to a crowd of about 1,000 at Desert Vista High School in Phoenix’s Ahwatukee area, said owning a home remains the cornerstone of the American Dream, but reforms are needed to make it possible for the middle class. The president outlined steps his administration has taken to shore up the housing market and added steps that would overhaul the nation’s mortgage finance system, including winding down the government-backed Fannie Mae and Freddie Mac, a plan that has bipartisan support on Capitol Hill.
"For too long, these companies were allowed to make big profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag," Obama said, also noting, "We're not where we need to be yet. We have to help first-time home buyers. We've got to turn the page on this boom-bust housing cycle that got us into this mess in the first place."
Obama said action needs to be taken to "make it easier for qualified buyers" to get houses. These included making the popular 30-year-fixed mortgage available to a larger pool of borrowers; he also tied in his plan for immigration reform, which he said will help the housing market and many aspects of the economy.
In a statement released late Tuesday afternoon, NAR President Gary Thomas lauded the president’s remarks, citing their alignment with the trade group’s own outline for housing finance reform.
“These principles closely mirror the outline presented by the National Association of Realtors® to the administration in early 2011,” Thomas stated. “NAR believes these principles will contribute to the long-term stability of our nation’s housing market and provide consumers with access to affordable mortgage credit, even during economic downturns.
“As the leading advocate for homeowners, Realtors® remain steadfast in our efforts to preserve the government guarantee in any restructured secondary mortgage market to ensure the continued availability of safe, reliable mortgages such as 30-and 15-year fixed-rate loans, Thomas continued. “In a fully privatized market, many middle class Americans and individuals on fixed incomes would be unable to access affordable credit or be forced into adjustable-rate mortgages pinned to interest rate variations after a limited term. These homeowners, faced with potentially dramatic rate increases, could experience payment shocks that rattle their financial stability, which also impacts mortgage markets and the greater economy.”
Obama chose Phoenix for the location of his speech, as it was one of the markets hit the hardest in the real estate drought, and is currently on a rapid rebound. This made the city an ideal stopping point for the president to publicly map out his plan for keeping the housing market on the upswing and leading the nation further into economic recovery.
Since 2011, when Phoenix' market crashed hard, the city has made large strides toward recovery. As of June 2013, according to a recent CoreLogic report, Arizona was one of the five states with the highest home price appreciation, landing at 16.2 percent. The Phoenix, Mesa and Glendale markets came in at a 17.1 percent increase for single family homes, including distressed property, and 14.7 percent excluding distressed. Home prices nationwide, including distressed sales, increased an encouraging 11.9 percent on a year-over-year basis in June 2013 compared to June 2012, according to the June CoreLogic Home Price Index (HPI®) report. This change represents the 16th consecutive monthly increase in home prices nationally.
According to an analysis by Mike Orr, a researcher at Arizona State University's W.P. Carey School of Business, the median single-family-home price in Arizona is up an incredible 25.9 percent from last year.
Following the president's remarks, Heather MacLean, a real estate agent with Arizona-based Realty Executives, said the Phoenix market has never been better. "We are seeing numbers in some areas that actually rival numbers that were seen in the mid 2000's," MacLean said. "Our inventory remains low and the buyers often times are competing with numerous offers on good properties. Buyers remain optimistic, sellers continue to be pleasantly surprised by the change of market and banks are back in the business of lending. All of that together makes an extremely healthy market place."
Tim Irvine, another real estate agent with Realty Executives in Ahwatukee, agreed commenting, "We continue to have a strong seller's market with 16,800 active listings, but this number has increased 5.7% in the last month, primarily due to higher interest rates and our typical late summer slowdown for July & August.
"The median sales price for all resale properties in July is projected to be $182,500 which would be a 1.4% increase over June ($180k). More specifically for Ahwatukee, the affluent Phoenix suburb where The president directed his message to the middle class today, the three month, rolling average sales price is up 2.0% to $312,845 for July."
To hear the president’s full speech on the housing market made in Phoenix Tuesday, click here.
Stay tuned to RISMedia for continuing coverage of the housing market recovery.
RISMedia Online Managing Editor Beth McGuire contributed to this report.