The latest data about the U.S. housing market reveal mixed signals about whether the nation's troubled economy is on the mend. But amid the uncertainty, industry experts like Jerry Howard, president and chief executive officer of the National Association of Home Builders, are working to strengthen the housing market. Howard has spent more than 25 years in the housing business, working as a lobbyist, real estate lawyer, and tax counsel. He recently chatted with U.S. News about the industry's future and how the housing market could play a key role in the economic recovery. Excerpts:
To what extent do you think the housing market is stabilizing?
In the short term, for the last four months, it appears that we could be bouncing around the bottom. And barring some unforeseen economic catastrophe or geopolitical upheaval, it looks like the economy is leveling off. And so we're marginally optimistic. One of the big storm clouds on the horizon, though, is when this [first-time home buyer] tax credit expires at the end of November. It is the first-time home buyer market that represents any positive signs in the industry, and if this credit expires at the end of November, we're really concerned about what that will mean to the market going forward.
What would it take to fully restore the housing market?
You could look at this tax credit as sort of an experiment, and as an experiment it was very, very successful in the segment of the housing market that it was geared toward. So what I would like to see and what I think would have a very dramatic impact would be an extension of that credit for another year and an expansion of that credit to be used by purchasers of any principal residence. That would, I think, help, No. 1, set the bottom in the housing market and go very far in alleviating the foreclosure problem. No. 2, it would buy down inventories at all levels of the housing market, and that in turn would spur construction within a few months, certainly in time for the next building cycle which will begin next spring.
What could be done to prevent another housing market collapse in the future?
First and foremost, we can't go back to the days where, as we used to say in the industry, if you fog a mirror you could get a mortgage. We have to have a certain amount of responsible regulation, but we certainly can't get to the point where we're at now at the other end of the spectrum and not give money to anybody, virtually. So you have to have balanced regulation of the capital flow into the housing sector.
Is this a good time to buy a home?
If you are a prospective home buyer who is currently employed and your own financial conditions are stable, this is the best possible time to buy. Inventories are at a point where you'll be in a better position to negotiate with the seller. Sellers are in a position where they really want to unload their inventory, and interest rates are still at almost record lows. So if you're in a position, personally, to buy and of the mind-set to buy, this is absolutely the time.
How far do you think the U.S. economy is from pulling itself out of a recession?
I'll go by the past, and in the past it's been the housing markets that have led the economy out of the recession. If that's going to be the case, policymakers still have to make some fundamental decisions when Congress gets back from the August recess, and if they act quickly, the building industry and the housing sector as a whole will be prepared to impact the economy in the next few months.