The Politics of Homeownership

by Justin Porembo

One of the questions I’m most often asked is whether presidential elections affect the real estate market. Realtor® Associations don’t play sides and don’t pick parties. We talk issues that impact the industry and homeowners across Pennsylvania. It’s our responsibility to educate voters about issues at the Federal level that can impact our industry and our member’s businesses. Although some presidential candidates do have a plan geared towards housing, we need to be cognizant of the lengthy process it takes to send such plans to Congress and to have these plans eventually implemented.

I personally feel very strongly that housing should be a visible issue in every election from local to Federal. There is ample evidence that where you live — the home itself and where it is located — have a tremendous impact on health, opportunity, education and economic outcomes.

Home Ownership is truly the essence of the American Dream. Studies show that 87 percent of Americans believe homeownership is part of their personal American Dream, giving them financial stability and providing individuals a place to raise their family and a nest egg to retire.

One of the issues that congressmen and senators from both parties express a great deal of interest in is tax reform. Ongoing debate puts a variety of tax laws under scrutiny, including those that affect commercial and residential real estate. Locally, school property taxes are most often discussed and impact our members and the public the most.
The National Association of Realtors® (NAR) continues to educate Congress and its staff members on the vital role that real estate tax provisions play in the nation’s housing market and therefore the economy as a whole. Although we don’t expect to see tax reform enacted any time soon, there are a large number of proposals aimed at creating healthier housing and mortgage markets currently under discussion.

Mortgage interest deduction is another important part of homeownership as it allows taxpayers who own their homes to reduce their taxable income by the amount of interest paid on the loan which is secured by their principal residence. The amount of deductible mortgage interest is reported each year by the homeowner’s mortgage company and is a key deduction offered as an incentive for homeowners. This deduction adds yet another benefit to being a homeowner and is a key factor on how the housing market impacts the economy. It is extremely important to have this deduction offered, as it puts consumers in a position where it is more beneficial to own a home compared to renting a home. It is imperative to have this available to consumers and is a key benefit for all homeowners. This is one of many issues we are constantly discussing with our elected officials to make sure the American dream of homeownership continues to be available.

More than $1.2 trillion in commercial real estate loans will come due over the next few years and many of these deals will have trouble with financing. NAR supports consideration of legislation and regulations to protect and enhance the flow of capital to commercial real estate. Additionally, Congress must reauthorize the National Flood Insurance Program to avoid the potential loss of 40,000 home sales each month (according to NAR research). In our region, flood insurance is an important and necessary part of many transactions due to the fact the Lehigh Valley has many water ways surrounding and moving through our counties.

Condominiums are another important key for housing throughout the Lehigh Valley. Condos are sometimes a buyer’s first home purchase due to more affordable pricing and flexibility. NAR supports developing policies that will give current homeowners and potential buyers of condos access to more financing opportunities and a wider choice of approved condo developments.

On February 2, 2016, the “Housing Opportunity through Modernization Act,” (H.R. 3700) passed the U.S. House of Representatives. It is expected that this legislation will put homeownership in reach for more families. During NAR’s Conference and Expo in San Diego, NAR President Tom Salomone said, “We look forward to seeing it advance through the legislative process and to the President’s desk, so it can be signed into law.”

This legislation includes efforts to make FHA’s recertification process “substantially less burdensome,” improving a process that is often costly and which condo developments must repeat every 24 months. H.R. 3700 also lowers FHA’s current owner-occupancy requirement from 50 percent to 35 percent and requires FHA to replace existing policy on transfer fees with the less-restrictive model already in place at the Federal Housing Finance Agency.

Additionally, the “Housing Opportunity through Modernization Act” streamlines the process for exemptions to FHA’s rule requiring that condominium projects have no more than 25 percent of the space dedicated to commercial use. This effort is in line with the Department of Housing and Urban Development’s initiative to promote neighborhoods with a mix of residential housing, businesses and access to public transportation.

REALTORS mostly advocate for Consumers in the governmental process. Making sure that the American Dream is obtainable, ensuring that this large personal transaction is not impeded by governmental policies or procedures.

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