Obama, Romney tiptoe around housing morass as they woo voters

If pocketbook
issues are the main focus of the U.S. presidential election, President
Barack Obama and Republican rival Mitt Romney have remarkably little to
say about a topic that directly affects most voters: the still-dismal
housing market.

The two candidates battle daily
over taxes, gas prices and job creation, but as they make their final
pitch to voters before the November 6 election, they have been largely
silent on housing, which accounts for one-sixth of the economy
"Neither
one wants to explain themselves because any explanation is going to be
unpleasant," said Richard K. Green, a public policy professor at the
University of Southern California.
Some
of the worst housing markets happen to be in key swing states, like
Nevada and Florida, where Obama and Romney make frequent stops in their
final two months of campaigning.
Obama
can point to some progress in refinancing and foreclosure relief
efforts, but even his campaign acknowledges he has not done enough.
Romney
has been haunted by his remark last year that the foreclosure process
should be allowed to "hit bottom," and he did not release a housing plan
until earlier this month. Long on rhetoric and short on details, it
calls for many of the approaches that Obama is already taking.
For
both candidates, the downsides are clear. The problem is massive and
dauntingly complex, and action to help struggling homeowners could stir a
backlash from neighbors who have kept up with their mortgage payments.
Five
years after the housing market's collapse touched off the 2007-09
recession, $7 trillion in household wealth has vanished and
neighborhoods across the country are still pockmarked with boarded-up
houses.
Although home prices are edging upward in many markets, they are unlikely to return to pre-bust levels for years.
HUGE DRAG ON THE ECONOMY
The
stagnant housing market amounts to a massive drag on the economy as
shell-shocked homeowners postpone major purchases as they try to rebuild
their wealth.
One-quarter of all
homeowners are effectively trapped in their houses because they owe more
than their homes are worth, eliminating their ability to move to areas
where they might find work. Unemployment in the construction sector
stood at 11 percent in August, well above the national average.
While
Obama acted boldly to stem the recession and prop up industries like
banking and auto manufacturing when he took office in 2009, he has been
less bold when it comes to housing.
As
home values plunged and foreclosures skyrocketed, his economic team
spent two years tweaking programs to modify and refinance existing
mortgages that did not address the problem on a comprehensive basis.
Fewer
than 2 million households have taken part in programs aimed at lowering
mortgage rates or reducing monthly payments, far short of the
administration's goal of 9 million.
Obama
has stepped up his efforts over the past year, but regulators, mortgage
lenders and Republicans in Congress have blunted many of his efforts.
One plan that would have forgiven debt owed by struggling homeowners - a
controversial approach that many experts say is the only way to fix the
problem - was blocked by the head of the Federal Housing Finance Agency
in July.
The Federal Reserve has
driven home mortgage rates to record lows by injecting money into the
economy through its bond-buying programs. Most economists polled by
Reuters think the latest round, announced last week, will not give a
substantial boost to the housing market.
U.S.
home resales rose in August to their highest rate in more than two
years, and groundbreaking on new homes also climbed, data on Wednesday
showed, signs that a budding housing market recovery is gaining
traction.
Although the worst of the
crisis has passed, the market remains deeply troubled. Some 190,000
properties get a foreclosure notice each month - more than twice as many
as before the crisis hit, according to RealtyTrac, a real-estate
research firm. Many of those who have gotten government help have
subsequently fallen behind on their payments again.
"It's kind of like rolling the rock up the hill over and over again," said RealtyTrac Vice President Daren Blomquist.
Many
Obama supporters are inclined to give him a pass on the issue. They
note that the housing market collapsed under his predecessor, Republican
President George W. Bush, and say he would doubtless be doing more if
Republicans would cooperate.
"I
honestly believe he's trying to help. He's trying to get money to the
people who are underwater," said retiree Michele Gates at an Obama
campaign event in Las Vegas last week.
In areas like Las Vegas that have been hit especially hard, Obama promises to expand his efforts if he wins re-election.
"My
administration has already helped more than a million responsible
homeowners refinance their mortgages and I'm running to give more like
them the chance to refinance," he told a crowd of 8,000 at the city's
convention center.
Elsewhere, Obama
mentions the subject only in passing as he touts the achievements of
his first term and lays out his agenda for a second term. In his stump
speech, Obama promises to hire more teachers, boost manufacturing jobs
and expand natural-gas production if he wins the election, but he makes
no new promises on housing.
Campaign
aides dispute the notion that Obama is avoiding the topic. They say he
speaks about housing in states like Nevada and Florida where it is a
concern of voters, even if he does not work it into every speech.
FEW TOOLS LEFT IN KIT
"The
president is the first to say that this is an issue where there's more
that needs to be done," spokeswoman Jen Psaki said. Obama "is happy to
put his record and the efforts he's made to improve the housing market
up against Mitt Romney's any day of the week."
Romney
told a Las Vegas newspaper last year that the foreclosure process
should be allowed to "hit bottom" - a view shared by many market experts
who say that efforts to slow the foreclosure rate only prolong the
pain. Democrats say the comment shows that Romney does not care about
struggling homeowners, and he has frequently had to clarify those
remarks in return visits to the state.
Romney's
stance is not as simplistic as Democrats would suggest. He has
expressed support for refinancing assistance and said lenders should not
be allowed to peddle exotic loans that were widespread before the
crash.
His housing plan, released
earlier this month, calls for selling off vacant homes owned by the
government, helping troubled homeowners avoid foreclosure, streamlining
regulations and reforming the government-owned finance companies that
underpin much of the mortgage market.
The
plan contains few details and echoes many approaches already under way.
When pressed for specifics, Romney points to programs that Obama has
put in place.
"There's a federal
program that helps people refinance homes and receive lower interest
rates," he told an NBC affiliate in Reno, Nevada, in July. "That's
already there for folks."
Like
Obama, he has not made housing part of his stump speech. Critics say his
silence on the issue undercuts his claim that he is the best candidate
to fix the economy.
No matter who
wins the White House in November, the problem is not likely to go away
soon. Economists say any rise in home values is likely to be modest as
long as wages stay flat.
Millions
of mortgages remain at risk of foreclosure, and consumers who struggled
to pay their bills during the recession are less likely to qualify for a
mortgage in the years to come. Efforts to boost the market, from
loosened monetary policy to tax credits for new buyers, may have run
their course.
"I don't think either
side has good ideas that are going to be catchy," said Robert Van
Order, a professor of finance and economics at George Washington
University. "There aren't that many tools left in the kit."

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