What’s your opinion? Leave your comments below or send a letter to the editor.

The presidential candidates, in coordination with the White House, are taking aggressive steps to facilitate a smooth transfer of power to the new administration.

At the top of the agenda are national security and the economy, of course. However, considering the housing market kick-started the over-leveraged credit debacle, the administration must act swiftly to address the drifting housing market, which weighs so heavily on the economy.

First, the problem must be properly diagnosed. Rampant foreclosures, collapsing housing values, sloppy underwriting and anemic sales are the symptoms of the larger problem during the boom: too much liquidity chasing bad loans in an unaffordable housing market.

The market downturn has zapped liquidity, pushed down home prices and put a stop to poor underwriting — this correction has, in effect, already rid the market of its worst woes.

But foreclosures are the consequence, which is keeping the housing market from finding a balance, as more and more homes are dumped on the market, further pushing down values. And the credit crunch has pushed underwriting standards to the other extreme, limiting the number of qualified borrowers who can purchase the rising number of home listings.

Stemming the number of foreclosures will go a long way to stabilizing the market, which should be the administration’s first step. Clearly, the new president’s first job is swift action on the human misery side of this mess.

With that challenge at the top, here is our to-do list for the next occupant of the Oval Office.

Advertisement

Homeownership is the American Dream. We have learned, however, it is not for everyone. An unevenness was given to owning over renting in the last two decades, as Republicans and Democrats ignored the needs of the nation’s rental market. The government rewards homeownership with more than $100 billion in tax subsidies on interest and property tax deductions. A new priority should be placed on renting a decent home at reasonable rents.

Re-tool federal housing programs

The federal government expenditures for affordable housing exceeds $40 billion. These programs should be re-thought in the current economic environment to give maximum help to those in need: low-income renters and people facing foreclosure.

Re-think regulation

An entirely new regulatory system must be put in place to bring oversight to the real estate market. One of those steps must be regulating real estate agents more like stockbrokers, where their fiduciary obligations are clear and the penalties are severe. Good agents will pass the test, bad ones will not and the market will be more transparent with fewer but more qualified agents.

Beef up RESPA

A core regulatory framework is in place to bring more transparency to the backend of the real estate transaction, preventing dubious relationships and excessive fees that are buried in the paperwork. RESPA should be bulked up, including more resources to enforce and punish those who do not comply.

Housing leadership

The administration must find new and capable leadership who are more than cheerleaders for the market but also leaders in crafting good long-term housing policy and fettering out shenanigans and corruption. Industry players who have conflicts of interest have filled too many housing positions across the country, including state real estate regulators.

Restore fundamental values for achieving homeownership

The government must stand on the side of savings — not consumption — when it comes to housing. That means building and designing housing that is to the scale of people’s needs as well as encouraging sensible down payments, even-handed mortgages and usury rates on second and third mortgage loans to prevent predatory lending.

Resist quick housing stimulus packages

In haste, governments often do things that have unintended consequences. This market correction must be allowed within limits to correct, which means bad lenders, irresponsible borrowers and poorly managed companies will go under. In addition, the market needed downward adjustment on housing prices and should not be followed by government actions to immediately stimulate housing inflation. This markets needs stability, not any more wild gyrations.

***

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×