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Housing Stalls Election-Year Economic Growth
Originally published on Wed March 7, 2012 6:53 am
RENEE MONTAGNE, HOST:
Let's devote the next few minutes to the subject that President Obama began his press conference on, the U.S. housing market. The president pointed out that in many ways the U.S. economy is looking up. But...
PRESIDENT BARACK OBAMA: There are still millions of Americans who can't find a job. There are millions more who are having a tough time making the rent or the mortgage, paying for gas or groceries. So our job in Washington isn't to sit back and do nothing. And it's certainly not to stand in the way of the recovery.
MONTAGNE: NPR's Chris Arnold joins us now to talk about just what the president is proposing to do about the housing market. Good morning, Chris.
CHRIS ARNOLD, BYLINE: Good morning, Renee.
MONTAGNE: So what jumps out to you in what the president had to say?
ARNOLD: Well, actually the first thing that I was struck by is that the president holds this big, you know, first press conference of the year, and there's all these big issues out there involving national security - there's Iran, there's Afghanistan - and the president opens up with talking about the housing market. And I think that that may signal two things.
And one is that the White House recognizes that the economy is getting better in a lot of different ways, but the housing market's not getting better and home prices are still drifting lower and the White House recognizes that this is, look, it's a critical issue for the economy. And number two, this appears to be a political drum that the president wants to beat going into the election.
And you could hear some of that language during the press conference. We've got some tape we can play here.
OBAMA: I'm not one of those people who believe that we should sit by and wait for the housing market to hit bottom. There are real things that we can do right now that would make a substantial difference in the lives of innocent, responsible homeowners.
MONTAGNE: And when the president says he's not one of those people sitting by, I gather that's a reference to Mitt Romney.
ARNOLD: Right. Mitt Romney said in a campaign trip to Nevada back in October that one thing you could do to help the housing market is, quote, "don't try to stop the foreclosure process. Let it run its course and hit the bottom."
And that seems to be what the president was referring to there. And the president's trying to draw a contrast. There's been criticism of those remarks by Romney by Democrats, the president saying, hey, I want to do something to help housing. And there's also a political calculus here as well. The housing market's been a pretty big disaster, it's fair to say, I think, on Obama's watch. Economists could argue, you know, whether that's his fault or not his fault or if he inherited it.
But the reality is, it doesn't look so good. And so as the rest of the economy recovers, the president may want to show that he's very focused on trying to help the housing market.
MONTAGNE: So what is the new thing that the president announced yesterday?
ARNOLD: A couple of things. The president talked about a deal with the banks to compensate some military service members who were wrongfully foreclosed on while they were deployed overseas, and this was a scandal a while back. The banks looked just terrible. I mean these are people fighting on behalf of our country and then the banks are improperly taking their houses. So hopefully there's some closure there and there's supposedly some compensation there for those folks.
The president also talked about the Federal Housing Administration, the FHA, and the FHA is going to be lowering fees for what are called streamlined refinances and the hope is that that will help more people to refinance their home loans.
MONTAGNE: And that has to do with the issue that the administration and some members of Congress feel that too few Americans are able to qualify for today's record low interest rates, right, on home loans?
ARNOLD: Yeah, and some economists and some lawmakers feel that there are upwards of 10 million Americans who should be able to qualify to refinance. They could be saving thousands of dollars. But they're blocked for various reasons. This could help some of them.
MONTAGNE: And then, Chris, new numbers out yesterday that foreclosures are on the rise again.
ARNOLD: Yeah, and one company that tracks this says that foreclosures were up 28 percent in January, and quickly what's going on there is that there was this big foreclosure settlement, this $25 billion settlement with federal and state regulators and the banks. Now that that's signed and kind of put to bed, a lot of banks have been sitting on homes, afraid to foreclose on them. Now they're moving ahead and they're starting to foreclose on a lot more people.
MONTAGNE: NPR's Chris Arnold, thanks very much.
ARNOLD: Thanks, Renee.
MONTAGNE: And this is MORNING EDITION from NPR News. Transcript provided by NPR, Copyright NPR.