Obama heads to Phoenix to talk housing (USA Today)

USA Today
(8/5/2013 8:18 PM, Aamer Madhani)

WASHINGTON — With the nation’s real estate market on a winning streak, President Obama is heading to Phoenix on Tuesday to make a major speech on homeownership where he will lay out his plan for keeping the U.S. housing market humming.

Obama chose Phoenix — the epicenter of the U.S. housing bust that wiped out $7 trillion in homeowner equity — to make the next speech in his ongoing summer road tour in which he has been spotlighting the progress the U.S. economy has made under his watch, while hammering Republicans for not working with him to help bolster a still lackluster economy.

The speech on Tuesday is a bookend to the remarks he made in Phoenix shortly after taking office in 2009 as the real estate market crumbled. And Obama will follow up his housing speech on Wednesday with an online interview on the real estate website Zillow where he will expand on his ideas for keeping the housing market on a winning streak.

"We are still not where we need to be, and there is still ample room to grow when it comes to providing more homeowners the assurances and capability to refinance their homes and to further stabilize and grow the housing market across the country," White House spokesman Jay Carney told reporters Monday.

Phoenix has made huge strides since the housing market bottomed out there in September 2011. The median single-family-home price reached $185,000 this May, up 25.9% up from last year, according to an analysis by Mike Orr, a researcher at Arizona State University’s W.P. Carey School of Business.

While housing prices are up and foreclosures are down significantly, as they are through much of the country, Orr warned that Obama will return to a city where first time buyers and moderate income earners are having a difficult time competing with institutional investors who took advantage of depressed prices.

"The biggest problem for the first-time buyer that is trying to buy something in the $125,000 to $150,000 range is that they are competing against offers that are all cash, and it’s very tempting for the seller to take those because they are very low risk," Orr said.

Obama is expected to repeat his call for Congress to take action to make it easier for homeowners who are underwater on their mortgages to refinance their loans at lower interest rates and move to make it easier for home buyers to get loans and will amplify his call for greater simplification of lending terms.

But in perhaps a new development, Obama is also expected to use his speech to lay out his principles for winding down the government-backed mortgage giants Fannie Mae and Freddie Mac, which own or guarantee about half of the nation’s mortgages

Fannie and Freddie collapsed in 2008 before being bailed out with almost $200 billion in taxpayer funds, and efforts to alter their status seem likely to face a swell of lobbying by banks and mortgage industry.

But two senior administration officials, who spoke on the condition they not be identified in order to preview the president’s speech, said Obama was pleased by bipartisan efforts in the Senate to phase out the government-backed enterprises.

The Senate banking committee chairman Tim Johnson, D-S.D., and ranking member Sen. Mike Crapo, R-Idaho, announced last month that they had reached an agreement on legislation to address the finances of the Federal Housing Authority as a first step in broader housing finance reform.

And in June, a bipartisan group in the banking committee — led by Sen. Mark Warner, D-Va., and Sen. Bob Corker, R-Tenn. — introduced plans to bring an end to Fannie and Freddie and replace them with an agency modeled after the Federal Deposit Insurance Corp.

Obama believes that there is a place for the government to play a "limited and targeted role for a catastrophic guarantee" in insuring mortgages, one administration official said.

But the president, who the officials suggested is warmer to the Johnson-Crapo plan, wants to see the legislation create greater assistance for first-time home buyers and do more to preserve affordable rental housing.