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In Arizona, Obama Touts Housing Rebound

In Arizona, Obama Touts Housing Rebound

By Alexis Simendinger - August 7, 2013

In a state stomped by the 2008 financial crisis, President Obama sounded upbeat Tuesday when he announced that "our housing market is beginning to heal."

The White House billed the president’s speech this week at a Phoenix high school as another in a series of economic addresses aimed at the middle class. The timing took advantage of Congress’ month-long August recess and anticipated a partisan collision this fall with the Republican-controlled House over the budget, the nation’s soon-to-expire borrowing authority, and the uncertain fate of the president’s legislative wish list, including immigration reform.

In Arizona, the White House used stagecraft -- a cheering and youthful crowd, a coatless president and his repeated use of “we” to draw sides in Washington’s debates -- reminiscent of Obama’s whistle stops in 2011 and 2012 through states with recession-fueled high foreclosure rates (and sizable Electoral College prizes). He did not win the Grand Canyon State in 2008 or 2012, but Democrats believe the rising Hispanic demographic there will make it increasingly more competitive.

“When more people buy homes and play by the rules, home values go up for everybody,” Obama said, transitioning to his plug for immigration reform. “According to one recent study, the average homeowner has already seen the value of their home boosted by thousands of dollars just because of immigration. And the good news is, with the help of your senators, [Republicans] John McCain and Jeff Flake, the Senate has already passed a bipartisan immigration bill that's got the support of CEOs and labor and law enforcement. This could help homeownership here,” he continued to cheers from the audience. “So I want you to encourage Republicans in the House of Representatives to stop, you know, dragging their feet; let's go ahead and get this done!”

In an address focused on a slowly recovering housing market, the president also talked up his infrastructure spending agenda; the benefits of the Affordable Care Act, which he called “Obamacare”; federal help for homeless military veterans; and an entreaty to the Senate to confirm Rep. Mel Watt, nominated in May to lead the Federal Housing Finance Agency. If confirmed, Watt would become the top regulator overseeing financing giants Fannie Mae and Freddie Mac, which were taken over by the government during the Great Recession.

During Obama’s remarks, which revisited his 2011 discussion about lowering barriers to refinancing, he encouraged bipartisan legislative efforts to remake Fannie and Freddie to transition taxpayers’ resources out of the mortgage underwriting business -- a job Congress failed to tackle as part of the 2010 Dodd-Frank financial reform law. In 2011, the administration released a broad plan for Fannie and Freddie. Currently, the government guarantees more than 80 percent of all mortgages, which the Obama administration called “unsustainable.” The chief goal is to get more private capital into the housing arena.

But as the housing market crawled out of a deep chasm, Fannie and Freddie racked up huge profits for the U.S. Treasury and helped maintain affordable mortgages -- two realities lawmakers may be reluctant to alter anytime soon.

During his summer swing to stump for jobs and the economy, Obama has rejiggered his State of the Union framework around the theme of middle-class “ladders of opportunity.” He has revisited his ideas about education, retirement, health care, and housing, hoping to cajole or cow lawmakers into enacting his policies before his status as a lame duck scuttles all hope of working with divided government.

Polls show that while the housing market is not booming everywhere, Americans believe it is generally bouncing back seven years after it began its swan dive. Nationwide, the housing market had plummeted so dramatically after 2006 that almost all measurements in 2013 show marked recovery, helped along by low interest rates, which benefit investors as well as individual borrowers, especially in states where housing prices are below market and the inventory is desirable.

Arizona, for example, is no longer near the top of RealtyTrac’s list of states with the highest foreclosure rates. In June, the number of properties there that received a foreclosure filing fell 16 percent from May, and was 66 percent lower than the same time the year before, the private real estate information firm reported. In comparison, Florida and Nevada continue to struggle with high foreclosure filings.

The president’s cheerleading for the economy meshes with the summer mood among many Americans, giving him the confidence to tout policy achievements in his second term, in addition to proposals stalled in Congress. But his Phoenix speech took place as mortgage interest rates have been climbing -- right along with property prices, which will make it harder for many people to buy.

“Thanks to the efforts of a lot of people like you, we've cleared away the rubble of the financial crisis, we're starting to lay the foundation for more stable, more durable economic growth,” Obama told a crowd of more than 2,000 people at the Desert Vista High School.

According to a national survey conducted July 23-24 by Rasmussen Reports, 51 percent of adults said they expect the value of their homes to stay the same a year from now, while 34 percent expect their home values to rise. Twelve percent thought their homes would be worth less in a year. Thirty-three percent said they were underwater on their mortgages, meaning the properties are worth less than what the borrowers still owe on their loans.

Asked if they believe buying a home is the “best investment” most families can make, 49 percent answered yes, 30 percent said no, and 21 percent said they weren’t sure. Rasmussen found no marked partisan differences in responses to that question.

In his Tuesday speech, Obama promoted quality and affordable rental housing, but he held out homeownership as the fiber of the American success story, despite the risky mortgage lending and exotic Wall Street securitizations that wiped out jobs, savings and whole communities after 2008.

“The most tangible cornerstone that lies at the heart of the American dream, at the heart of middle-class life … is the chance to own your own home,” the president said.

In June, in its monthly housing survey, Fannie Mae found 72 percent of those polled said they thought it was a good time to buy a home, and 36 percent thought it was a good time to sell. Americans said their finances were improving, and they said they knew that mortgage rates and home prices have spiked, the report said.

“The share who expect their personal financial situation to improve during the next year climbed to 46 percent, the highest level since June 2010,” Fannie Mae reported. “The share who say their household income is significantly higher than it was 12 months ago jumped 6 percentage points to a survey high [of] 26 percent.”

Alexis Simendinger covers the White House for RealClearPolitics. She can be reached at asimendinger@realclearpolitics.com. Follow her on Twitter @ASimendinger.

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