July’s housing sales numbers were worse than expected, and while it’s too early to say whether federal homebuyer tax credits will be revived, the Obama administration is not ruling it out, Housing Secretary Shaun Donovan said on CNN’s Sunday morning news show, "State of the Union."
Told by host Ed Henry that he’d been "pretty rosy" in the past year about the outlook for housing, Donovan defended the administration’s performance, saying prices have stabilized after 30 months of declines.
The housing market would be "a lot worse" without steps the administration has taken to bring interest rates to record lows, provide a homebuyer tax credit, and help "millions of families stay in their homes," Donovan said.
But Donovan acknowledged that "the July numbers were worse than we expected, worse than the general market expected, and we are concerned."
Sales of existing homes plummeted by 27 percent in July, and sales of new homes were down 12 percent.
Donovan said the administration is preparing to roll out two new measures — an FHA refinancing program targeted at underwater borrowers, and an emergency loan program aimed at helping unemployed borrowers keep their homes.
While bad loans were at the root of the problem in housing markets when the administration came into office, the key issue today is jobs, Donovan said.
Two other guests on the show — Florida Gov. Charlie Crist, and Rep. Kendrick Meek, D-Fla. — told Henry they’d welcome a restoration of the homebuyer tax credit program.
Crist, a former Republican who’s running as an independent for the U.S. Senate in Florida, said bringing back the credit would "help enormously."
"Just last night I was in Orlando at the Florida Realtors Association meeting, and one of the participants asked me that exact question," Christ said, adding that "anytime you can reduce taxation in order to spur the economy forward, that’s a good thing to do."
Kendrick Meek, who’s also running for the Senate in Florida, said the homebuyer tax credit "was essential to helping individuals buy a home again. That tax credit means an awful lot here in Florida. We need more of it."
Some critics of the homebuyer tax credit said it provided little real boost to housing markets, because most families that claimed it would have bought a home anyway. Instead of increasing demand for housing, it simply pushed that demand forward.
Henry asked Donovan about recent articles in Time magazine and the New York Times questioning whether homeownership is still a good way to build wealth.
In "Housing Fades as a Means to Build Wealth," The New York Times’ David Streitfeld quotes Zillow’s chief economist, Stan Humphries, predicting that in the future, housing values will only keep up with inflation.
In "The Case Against Homeownership," Time’s Barbara Kiviat begins with the premise that "Homeownership has let us down."
"This is kind of a radical new idea that is being talked about — a debate throughout the country that maybe homeownership is not for everybody," Henry told Donovan. "Where does the administration come down on that?"
While homeownership is important, Donovan said, the administration’s position is that "we need to have a more balanced housing policy in the country. For too long, our focus at the federal level was only on homeownership to the exclusion of rental."
