Housing Election - Which Candidate is Better for Homebuyers?

by 12 Sep 2012
To quote a man much wiser than myself  -  it’s the economy, stupid.

(TheNicheReport) -- This is an election that has come down, tooth and nail, to pretty primal questions about economic recovery and what is best for the American taxpayer. While the 2004 election centered on questions about defense and national security, this year’s incumbent-versus-challenger dialogue has swung far towards questions of which contender is best equipped to help lift America from this economic quagmire.   While I’m not here to advocate for any particular candidate’s economic policies (and elections are not won solely on economic platforms alone), I feel it is more than sound reasoning for any real estate wonk to dip their toe in the pond typically occupied by policy wonks. Both candidates offer their own economic and tax platforms, and both candidates offer incentives and drawbacks for those keen on home purchases and real estate investments. In no prejudicial order, let’s examine our incumbent candidate:

Barack Obama assumed office only shortly after the 2008 recession began snowballing. While his first presidential run was built on a platform of social change and broad reforms diametrically opposed to the policies championed by the preceding Bush administration, lingering debt in the public coffers and private sector stagnancy have forced the national discourse in a radically different direction.   President Obama’s economic platform is much more aligned with Keynesian doctrine, which endorses limited but important input from the federal government in shaping economic policy. Keynesians are much more likely to endorse social security and social safety nets, in addition to limited business regulation and public debt relief. Barack Obama’s brand of neo-Keynesianism has won supporters ranging from economist Paul Krugman to veteran economic liberals like Senator Dianne Feinstein while building resistance from more libertarian advocates like Mark Spitznagel and congressional conservatives like Paul Ryan and Rand Paul.

However, here are breakdowns of the possible pluses that a second Obama term could provide homeowners and real estate investors:  
  • Obama supports extending homebuyer credit to those interested in purchasing their first home.
  • The Obama administration has consistently vouched for mortgage debt relief. While the evaluation of economic observers remain mixed, the Making Home Affordable Program (MHA) offers support for mortgage payment in addition to relief for those facing foreclosure and underwater mortgages.
  • The reduction of interest rates under Obama has made borrowing and loans easier to sustain, which could spell positive ramifications for those who handle their mortgages with prudence.
Mitt Romney had long been expected to emerge as the Republican contender against Barack Obama in the 2012 election, and only recent accepted the party nomination. While his ideological stances have shifted over the course of his political career, his elevating of Paul Ryan as his running mate has affirmed his platform’s allegiance with staunch fiscal conservatism. Paul Ryan has long endorsed public sector austerity measures, and brings an angle to the Romney-Ryan ticket that can be framed as the fiscal opposite to Barack Obama’s neo-Keynesianism.

Ryan’s crafting of the Path to Prosperity budget has shown him strongly in favor of loosening government regulation of the private sector, and cutting taxes for the highest-earning income bracket. Congressman Ryan’s major impetus for this position has been the belief that high-earning Americans will invest their capital in various holdings or private enterprise. Ryan has argued that this will stimulate the private sector and encourage job growth that drives away many of the post-recession woes, including a sagging housing market.   However, generalizations about the VP-hopeful’s fiscal leanings aside, here are areas in which Mitt Romney as president could provide boons to homeowners and property investors:  
  • Mitt Romney has frequently been critical of lowered interest rates. Increasing interest rates would prove a blessing for homebuyers with a high volume of personal investments.  
  • Mitt Romney broadly endorses rolling back government programs like MHA and encouraging the capital back into the private sector. Those who advocate this position (like his recently confirmed running mate) point to it as a means of stimulating the economy and overall curtailing the recession.  
  • Those who hold faith in government-exempt solutions to lifting the economic quagmire will likely take heart with Romney’s favoring of cutting targeted programs like debt relief and housing loans, and letting the private sector economic gears turn unaltered.
Whether voters usher in a second term for Obama, or a Romney presidency, it’s clear that both candidates maintain attention to America’s uneasy real estate market. Whoever ends up occupying the oval office come 2013 will quickly be forced to address our national property concerns.

This is a guest post from Harrison Stowe, a writer for NVR Inc., a homebuilder in Montgomery County, MD . Blogging about a range of real estate topics including investment, mortgages, and new construction, Stowe combines finance knowledge with experience in the current real estate market.


  • by Barb Davis-Hassan | 9/12/2012 2:16:47 PM

    As a practicing Realtor I am seeing, reading, hearing all good news every day that the Housing Industry is showing good signs of recovery. The programs that are in place to help with the housing recovery are working. I would therefore strongly support President Obama for a second term to keep the economic recovery moving in the right direction.

    On the other hand during the campaign trail GOP Candidate Gov. Mitt Romney was overhead suggesting that he wanted to eliminate mortgage interest deduction (MID) on second homes and also to eliminate HUD. Of course once that got out he became very defensive. To be fair there is one sentence in the GOP platform addressing the issue eliminating the MID which states the GOP "wants to strongly support tax reform, however if they are not successful in doing that then they say "we must preserve the MID". How nice of them. That's it! To me this means the GOP's first and primary task at hand is to reform the tax code which would mean eliminating the MID. If no luck doing this than the MID is safe. For buyers of second homes eliminating the MID would be devestating. The housing industry is very fragile and any mention of eliminating the mortgage interest deduction would be catastrophic.

    Gov. Deval Patrick, MA speach from the Democratic National Convention pretty much covers why Gov. Romney, MA, would not be good for the nations economy overall. He should know as he followed Gov. Romney when he left office in Massachusetts.

  • by John C | 9/12/2012 5:59:03 PM

    The author speaks as though Keynesian economics is the standard. It is not. Keynesian economics is a mid point between socialism and classical economics. It always rears its head when we have a depression. The question is whether we would have had 4 years of virtually no recovery or we would have recovered in a few years had we not gotten all of the new extraordinary regulations. Had the government not cut off no-income verification mortgages and private capital in the mortgage market, I doubt we would have continued the plunge into the abyss. They had a place until they were abused.

    I think Barb has the parties confused. Democrats want to raise taxes and eliminate deductions to reduce the deficit. Republicans say they want government spending to be cut rather than increase taxation.

    Perhaps the writer would have government enter his home-building business since they are such good managers. Government is very good at creating a stagnant economy. We actually need some boom and bust for the economy to continue to grow. The real reason we had a larger than normal bust this time wastpoor government policy where everyone received a mortgage, starting with Bill Clinton. That was complicated by irrational greed of people who sold out their employers, Fannie and Freddie and the investing public to pad their own pockets.

  • by Tammy P | 9/13/2012 11:13:31 AM

    John, perhaps it is you that is mistaken. Or is that you are so deeply rooted in your republican ideogy that you can't see the truth. No income verification mortgages are what got us into this MESS, along with all the other lending short-cuts and "creative lending" practices. You want to go back to that just so your own paycheck goes back up? Shame on you.

    Economic recovery is always slow. I and not willing to vote for a man who wants to take the country back to the same economic policies as George W. Hell, he won't even TELL US what his plans are, why should we think they are any different than before?

    Nope. I'll stick with a slow progression forward, thanks. Not backward.


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