Friday, January 27, 2012

Obama Puts Real Estate On The Back Burner

Fixed mortgage rates ticked up this week as the housing market ended 2011 on a high note.  New construction of one-family homes rose 4.4 percent in December to an annualized rate of 470,000, the most since April 2010. Existing home sales increased 5.0 percent at the end of the year to 4.61 million houses, the largest amount since May 2010. Furthermore, pending home sales in November and December averaged the highest reading since the March and April 2010 period.

With all that good news I feel like I should be drawing happy faces on the next line—but the fiscal train wreck is still coming.  The American family and the American political system are cracking up.  We’ve gone so far off the track that a little good news is just that, a LITTLE good news, and certainly not enough to save the country.

It was clear in this week’s State of the Union speech that our Narsissistic President just doesn’t see these issues clearly—it’s as though he wears rose-colored glasses, and sees things as he wishes they were.  “The economy could have been worse”, said he.  And then he looked right at me and said I should thank him for killing Osama Bin Laden.  I should be grateful for his nixing the pipeline.  I should be proud of his efforts to support poorly run companies like Solara—Dane, he said, I think you owe me for all my hard work.  Really, I thought--glad you're back from another vacation, but what about spending a few minutes being a leader?
As David Brooks of the New York Times wrote, “The president is making a mistake in running a Sunset Boulevard campaign, he is convinced he is big; but it’s the presidency that got small.”

Brooks says politically the president has to resonate with voters who feel the country is on the wrong track.  Prudentially, the president has to prepare for the likelihood that the economy is going to hit another rough patch this year.  If Greece leaves the Euro or if the French banks implode or if the Iranian crisis comes to a head.  If any of that happens, the desire for profound change would be overwhelming and the candidate with only a few carefully targeted tax credits would get blown away.
Meanwhile over at the 18th debate Republicans continued to speak with epic alarm about the nation’s problems.  They are unified behind big tax and welfare state reforms that would purge Washington and shake things up.  But they are now mired in slinging mud at each other.  Romney and Gingrich remind me of two little boys in snowsuits trying to push each other over. 

What they need is a carefully written list of topics that would be big ideas that will resonate with Americans, and which will lead the country to prosperity.  When these “presidential” issues are discussed, there are only a half dozen or so key topics: 1.)  The economic health of the United States, including employment, entitlement and foreclosure/bankruptcy laws.  2.) The support and enforcement of existing laws, particularly as they relate to the protection of our citizens and our borders.  3.) The possibility of a new tax framework that would be both simple and fair—and may as well be a flat tax.  4.) Our future international relationships—including the annual “gifts” we bestow on friends and enemies alike around the globe.  5.) The care, support and growth of our military.  6.) Support of (and preference to) American business and within that topic I include real estate.  Here our president should be, if not a defacto leader, then at least an interested cheerleader.

In his State of the Union the President was sketchy about the details of a new bailout but talked about giving every responsible homeowner an opportunity to refinance at today’s historically low interest rates.  He said on average each homeowner who refinances would save about $3,000 a year that could be spent on other needs, thus bolstering the economy.  Naturally this “opportunity” will not go to those who most need it—many of whom are on the brink of bankruptcy, so are not as the president says,“responsible”--or those who made and protected their investments by paying off their mortgages.  This bonus is earmarked for the vast middle group of folks who have been making payments on their homes, but owe more than the house is worth.  It’s only a bailout if you qualify.

Dane Hahn is a real estate professional practicing in Englewood.  He can be emailed at by phone at 941-681-0312.  See him on the net at

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