Hope for Housing Reform in 2013?

Posted by admin on Feb 22, 2013

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This week, the index of US leading economic indicators rose for a second month in January. Notwithstanding, let’s not allow the news about our economic and housing market rebound lull us into a false sense of complacency: it’s time for Congress to tackle housing finance reform. While you have heard my homebuilders’ “glass half full” prognostication for some time; in fact, there remains a significant amount of work yet to be accomplished on the structural side of the business. Amid a current backdrop of political gamesmanship, cabinet staff shuffling and sequestration blame on their collective plates, will housing finance reform be something the government finally tackles this year?

We all realize the housing market anchors the entire economy, and as such, we’re long overdue.

Lee R. Gibson, a community banker in Tyler, Texas, in his article, Memo to Washington: Time to Tackle Housing Finance Reform exclaims, “From my vantage point, I can tell you unequivocally that it is high time Congress take up housing finance reform.” Yes, Gibson sees the big picture. When the housing market is healthy, Americans feel good. When it’s bad, consumer confidence remains sluggish. Who can forget the debilitating malaise experienced during the financial crisis? While we’re now realizing steady improvement in the housing channel, the wounds remain and won’t fully go away until sustainable reform is accomplished. What does Gibson suggest? He encourages Congress to give “positive signals” that provide certainty about the future of housing finance. Admittedly, he and others remain concerned about how we resolve Fannie Mae and Freddie Mac as well as how we strengthen the Federal Housing Administration, among other issues and opportunities.

And Gibson isn’t alone. A number of bankers in the industry are wondering aloud why homeowners are turning down perfectly good opportunities to make positive changes to their own mortgages. While of course, some are taking advantage of these historic low interest rates and appraisal-free refinancing, many homeowners remain hesitant, unsure and skeptical to trust government programs like HARP. In fact, Lisa Price, a mortgage banker for Quicken Loans, laments about one client who recently turned down a refinance that would have saved him $630 a month. Price remains perplexed, as are many others who are trying to persuade homeowners to take advantage of smart and legitimate deals. Surprisingly, only about 25% of homeowners who qualify for the HARP program actually end up refinancing. So what gives?

Pain from both the housing bubble burst and the financial crisis is still fresh. On the encouraging side, home inventories were reported this week to have fallen 25% year-over-year to a current level of just 1.74 million units: the lowest since December 1999. Yet, there are only so many hedge fund assets willing to scoop up depressed housing inventory for their rental investment. Will single family homeowners fully regain their trust again? Not until Washington takes some action, instilling optimism and confidence in our nation. Only then will people act – to provide the sustainable boost that our economy truly needs.

On Wall Street this week, Lumber Liquidators beat expectations while exceeding its revenue guidance, rising over 20% from the earlier year quarter. Similarly, American Woodmark announced nine-month net sales rose 21%, compared with its prior fiscal year. While increases were experienced in all of its sales channel, I was particularly impressed that the cabinet manufacturer’s “new construction” division led by more than 50%. And those new rooms certainly must need new furniture, as even La-Z-Boy beat both expectations on revenues and earnings per share with its margins growing 130 basis points to 32.5%.

 


 

Kleber & Associates is an Atlanta-based integrated marketing communications agency serving the home and building products industry for 25 years. Visit the Kleber & Associates website for the latest news and information about marketing for home and building products for consumers, architects, builders, remodelers, designers and manufacturers. Through our marketing, advertising, public relations and digital marketing expertise — we build better brands that build a better home.

This entry was posted by admin on Friday, February 22nd, 2013 at 6:05 pm and is filed under Housing Market. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.