President Obama participates in virtual housing roundtable
Many curious about hope for HARP 3
If you follow as many housing-related Twitter accounts as we do, your feed has been nothing but Obama talk this week, and today was no exception. The president sat down with Zillow (Z) CEO Spencer Rascoff on Wednesday to take housing-related questions via social media.
The first question for Obama was how will interest rates affect the future of home prices if they continue to rise. What we saw in terms of the plunge in home prices during the recession was something we hadn’t see in a long time, the president answered. He noted that we’ve experienced a great deal of refinancing activity, which could save homeowners as much as $3,000 a year. So far, the housing market has continued to be robust, despite rates, said Obama, who added, “It’s still a soft housing market.”
“The real economy is directly related to the housing market,” said Obama. The president added that interest rates will likely continue to tick up as the economy approves. It’s important to let everyone who is eligible refinance, the president said in his first reference to the popular topic of the third phase of the Home Affordable Refinance Program, also known as HARP 3.
However, interest rates remain low historically, the president added. Keeping the overall economy moving in the right direction means a stronger market for homes and that the value of homes will continue rising. A lot of potential families put off buying a home during the recession, meaning there is a lot of pent-up demand that we will likely see in the near future.
The next question that came in to the president asked if there was hope for HARP 3 — a topic that, according to Rascoff, made up about 30% of all the questions submitted — to which the president replied “there should be hope.” According to Obama, HARP 3 was an idea that was strongly support by Mitt Romney’s team, and is something Democrats and Republicans can get together and get done, the president added.
There are Republican and Democratic senators that are trying to figure out how we can learn from the past and start building a firm foundation moving forward. When Congress is back in session in September, the president assured this is something he will be pushing.
Mirroring closely the president’s speech yesterday in Phoenix, the next question was about affordable renting. We need more affordable quality rental housing; renting is a great option, especially if you’re young, the president said. During the housing crisis, people who should have been renting decided to buy instead, Obama added.
A lot of young people who want to rent are stuck with student debt. The president mentioned that his administration is putting forward initiatives to drive down the cost of college to prevent excessive student debt.
Another issue that doesn’t seem housing related, the president joked, is immigration reform. “If we get immigration reform done, suddenly you have all kinds of families coming out of the shadows,” he said. They add value to the community and increase property values, often in areas hit hardest with foreclosures.
Touching on GSE reform – a controversial topic the president addressed in yesterday’s speech — one question asked was what models will fill the GSE gap post-reform.
You can’t have situations in which the government is underwriting and guaranteeing all of the lending that is being done across the country, the president began. We’ve been trying to reduce the portfolio each year by incremental amounts, not too quickly, he said. Our long-term goal is to let the private markets get back in there. We increased the maximum home value that could be financed in the midst of the recession, the president noted, “now we’re starting to scale that back.”
We are confident the private market can step in and do a good job, Obama added. “It’s a return to earlier models,” he explained.
Finally, someone asked what help is available for homeowners looking to refinance but who don’t have a GSE-backed loan — somehow bringing the virtual roundtable full circle as the president said this is where the HARP 3 program comes in. Keep in mind, this would be good for the entire economy, Obama added. With the extra money saved after refinancing, many homeowners would likely be able to buy that new car they need or finally purchase their children a laptop for school.
The president concluded by encouraging everyone listening to contact their local congressman and voice their support for HARP 3.