President Obama Answers Your Housing Questions with Zillow
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President Obama Answers Your Housing Questions with Zillow


Mr. Rascoff:
Welcome, and thank
you for joining us today. Zillow is honored to host
this unprecedented event and connect homeowners, renters
and prospective buyers with President Obama, who’s ready to answer your
housing questions. The housing market has come
a long way in the last year and we’re all very happy to see
most local markets bouncing back after the housing recession,
with many homeowners free from negative equity and
sellers enjoying a competitive environment. Still there are concerns
about the future. And we’ve received
thousands of questions over the last couple of days
via social media. Today we’ll pose some
of these questions — your questions —
to the President. I’m honored to welcome
President Barack Obama. Mr. President. The President:
Great to see you. Mr. Rascoff:
Thank you. The President:
Thank you so much. Mr. Rascoff:
Mr.President,
our first question comes from Andrew Houston in
Gainesville, Florida. Let’s watch his video. Mr. Houston:
Good morning, Mr. President. My name is Andrew Houston
in Gainesville, Florida. And I was wondering how
you feel rising interest rates over the last three
months are going to affect the housing recovery
going forward. I was actually fortunate
enough to refinance at historically
low rates earlier this year, but I am still well in
excess of 30 percent negative on my mortgage, and I’m wondering how
these interest rates are going to affect
the future value of my home. Thank you very
much for your time. The President:
Well, it’s a great
question, and obviously, particularly in states
like Florida where, when the housing bubble
burst, it was very painful. A lot of people have been
watching the interest rates and watching what are
happening with home values. Just a little bit
of historic context. What we saw in terms of the
plunge in home prices in the midst
of the great recession was something we hadn’t
seen in a very long time. And it hurt a lot of families. Homeownership is the
quintessential element of the American Dream. It’s what all of us understand
when we say we want to have some
middle-class security. And so what we did over
the first three and a half, four years of my administration
was throw everything that we could at helping homeowners
who had seen their houses go underwater to slowly
build back that equity. With the help of
the Federal Reserve, interest rates came down. And as you said, Spencer, what
we’ve seen is healing pretty much across the country when
it comes to the housing market. We’ve also seen a lot
of refinancing activity, in part because we modified
some administrative rules so that folks who had government
guarantees could refinance even if they were underwater — and it saves people
a lot of money, up to $3,000. We’ve seen interest
rates now tick up. So far at least, though,
the housing market has continued to
be fairly robust. And there’s been
reporting just this week, some of the data
has come in showing that you’re still seeing
some good, steady growth. But I think that
all of us recognize that it is still
a soft housing market, in part because it’s still
a soft employment market — there are still a lot
of folks who are out of work. And the real economy is directly
related to the housing market. So what we’ve heard from
the Fed Reserve Chairman is that he thinks it’s important
for interest rates to remain relatively low so long as
unemployment remains high. That should continue to
help the housing market. But given that interest rates
tick up a little bit as the economy improves,
it is especially important for Congress to act on
the proposal that we put forward which says let’s not just
let a few people refinance; let’s allow everybody
who is potentially eligible to go ahead and refinance. It can end up being the
equivalent of a $3,000 tax cut, basically, money in your
pocket, or, alternatively, as Andrew was talking about, it
gives homeowners an opportunity to start building back some
of the equity in the home that they lost during
the Great Recession. Mr. Rascoff:
And you’re referring to HARP 3, which we have a lot
of questions about, so we’re certainly
going to discuss that. To keep the long-term
perspective, mortgage rates have
ticked up about a point, but we’re still in
the low fours, which, if you take the long view, is still an incredibly
low rate for a mortgage. The President:
Well, not to get too personal, but our home
back in Chicago — not the White House, which
as I said, that’s a rental — (laughter) — our home back in Chicago,
my mortgage interest rate, I would probably benefit
from refinancing right now. (laughter) I would save some money. When you’re President, you have to be a little careful
about these transactions, so we haven’t refinanced. But there’s no doubt that
somebody like Michelle and I, who bought our house
several years ago, that if we went out to
the market right now, we’d end up saving some money. Mr. Rascoff:
Right, right. This next question comes
from Jill Fitzpatrick, from Louisiana, and she’s from
a part of the country where home values have bounced
20 percent off the bottom. Let’s watch Jill’s video. Ms. Fitzpatrick:
My name is Jill Fitzpatrick. I was wondering what changes
you think could be made to help second-time homeowners. I refer specifically to young
families who lost considerable equity in their first homes
due to the housing bust — families faced with buying
a second, larger house, now in a market like New
Orleans, where I live, where prices have
skyrocketed astronomically, pricing many of us out
of what should have been a logical and
economically feasible next move. The President:
Well, I think the point that was
made there is really important. Most of us, when we
buy our first home, we buy a starter home. When Michelle and I bought our
first home, we bought a condo, and lived in it
for about 10 years before we then moved into
a full-fledged standalone home. And the reason we
were able to do it was because we built up some equity, as well as got some
raises and eventually were able to get the down payment
together for a larger house. It’s tougher now for folks
who have lost their equity. I can’t say that there is a
magic formula in a situation that was just described,
in a place like New Orleans. On the one hand, it’s great that housing
values have bounced back; on the other hand,
most folks haven’t gotten all their equity back if they
purchased right in 2005 or 2004, right before the bubble popped. What we do know is
that if, number one, we keep interest rates low,
that will help. Number two, that keeping
the overall economy moving in the right direction means
that there is a stronger market for homes and the values of the
existing starter home goes up. The good news is, is that you’ve
got a lot of potential families or families that put off buying
a home during the midst of the recession, and so if
you look at the numbers, the amount of new
family formation is going to be increasing
fairly rapidly. There’s going to
be pent-up demand. And potentially, those
smaller starter homes, they’re going to increase
in value as well. And one of the things that we’ve
been looking at is, finally, how can we make sure
that more people whose homes are still underwater
can potentially benefit from the refinancing
programs that we talked about. Mr. Rascoff:
All right. So that’s a perfect segue
to the next question, which is in fact about HARP 3. So this question comes
from Colin Robertson. And of course, HARP is
the government program which lets homeowners who are
underwater on their home refinance their mortgage, as long as they’re not more
than 20 percent underwater and as long as their loans are
backed by Fannie and Freddie. About 10 percent of the
questions submitted today were about HARP. So Colin writes to us. He says: “What’s happening
with MyRefi or HARP 3? Is there any hope
of such a program?” The President:
I think there should be hope. Keep in mind
that this is a program that not only I put forward
and supported and talked about during the State of the Union, but this was an idea that
was strongly supported by Mitt Romney’s
chief economic advisor. So there shouldn’t be
an ideological barrier to getting this done. This should be something that
Democrats and Republics can come together and get done. Now, Congress, I think
all of us recognize, has been a little broken lately. But the good news is, is that there are Republican
and Democratic senators, at least, who have
been in a conversation about how do we learn the
lessons of the past and start building
a firmer foundation for housing going forward. And a lot of the concerns, a lot
of the questions had to do with how do we get Fannie and Freddie
reformed so that they are not in a situation in which taxpayers
are essentially subsidizing huge risks that they’re taking. As part of a package, you could
see Fannie and Freddie reform that protects taxpayers, puts housing on
a more stable footing, but in the interim also provides some immediate
relief to homeowners, giving them a
chance to refinance while interest
rates are still low. So this is something that
I’m going to push again once Congress gets back in September,
once they’re back in session. As part of a broader
package of housing reform, let’s see if we can potentially
even get this done before the end of the year. Mr. Rascoff:
And we’re going to
talk about GSE reform, which was a very hot topic
among the questions that were submitted as well. This question is from
Jason Boatman, from Phoenix. Phoenix, of course, is one
of the parts of the country that was hardest hit
by the recession. It’s where you delivered
a very important housing address yesterday. Let’s see what Jason has to say. Jason writes: “I live in
the greater Phoenix area. My neighborhood
has been hit very hard by the foreclosure crisis. Things are finally
starting to look up, but we’re certainly not back
to pre-recession levels. How is the administration
planning to help homeowners in areas like Phoenix
regain our footing?” The President:
Well, there were
some areas like Phoenix, like Las Vegas,
parts of Florida, that had been
especially hard hit. So in the immediate
aftermath of the crisis, one of the things that we
did was to get a special fund allocated to those
states specifically to help some
of these communities. In some cases, it meant more
hands-on help and counseling for homeowners in these areas. In some cases, it was a question
of states or local communities finding ways to get some
of the foreclosed properties off the market,
or at least stabilized so that they weren’t
depressing adjoining properties. And we are continuing to work
with the Mayor of Phoenix, the Mayor of Las Vegas, those communities that
had been especially hard hit. In some areas, one
of the questions is, are there so many foreclosures
and abandoned properties that it actually pays off for us to
either repair them and put them on the market as rental
properties, or alternatively, in certain areas
of the country where these are really rundown properties,
go ahead and tear them down. The advantage of putting
these on the rental market is obviously if somebody
is living in them, they’re more likely
to maintain them, and it creates the kind of
atmosphere in the neighborhood that allows property
values to go back up. And we’ve got a lot of
creative programs like that. What we want to do is make sure
that there are enough resources coming out of Congress. And the Secretary of
Housing and Urban Development I know has a number of ideas about how we can have even more
of an impact in revitalizing some of those communities
that have been hardest hit. Mr. Rascoff:
It’s been great to see
in some of these communities institutional investors
have been buying up tens of thousands of these
properties and rehabbing them and then renting them
— in some cases, renting them
to the existing homeowners who are underwater
on their own home. The President:
That makes a lot of sense,
and it’s good business sense. Look, we know that a basic
principle of the free market is if you can buy low
and sell high, you’re in a pretty good spot. These institutional investors
pulling together big chunks of property, going ahead and
making them rental properties, which help to cover
their costs immediately, but they’re also hoping to see
appreciation in the long term — that can be good
business sense for them. But just as importantly
or more importantly, for those middle-class families
where they saw these property values drop, having that
kind of stabilization can really make a difference. And in a place like Phoenix, we’ve actually seen
20-25 percent increases in property values. People are feeling much more
optimistic about the future than they were before. And we’re also seeing more
housing construction going up, which tells you that there’s
still pent-up demand out there. We’ve just got to make sure
that we get everybody firing on all cylinders to maximize it. Mr. Rascoff:
This next question
comes from Jacob. Jacob is among the one in
three Millennials who lives with his parents because he can’t
find affordable housing. So let’s watch Jacob’s video. Jacob:
Good morning, President Obama. My name is Jacob
and I live in LA. I’m a recent college graduate
with a full-time job, but I still live at
home with my parents. I’m wondering, with
massive student loan debt, will I ever be able to move
into a house of my own? Not even looking to buy,
just looking to rent. The President:
Well, Jacob asks a question that a lot of young people
are asking right now. And there are two
components to it. Number one, we need
more affordable, quality rental housing. And what I said in my speech
yesterday, all of us, long term, have the aspiration
of a home of our own. But in a lot of markets,
renting is a great option, especially if
you’re still young. And so as we look at the
various housing proposals that I’ve put forward — making
sure that people can refinance, making sure that we’re
reforming these GSEs — one of the components
is also making sure that we’ve got more resources to
construct or get on the market more affordable housing. And that is not something that
people should shy away from, deciding that at this
stage in their lives — Jacob looked like a
pretty young guy — that renting is
probably the best option, until you know that you
can actually purchase safely, soundly and make your payments. Part of what happened during the
housing bubble was that people who probably should have been
renting were encouraged to go into the housing market, and
they got hurt and the economy as a whole got hurt. But he also mentioned
something else, which is the fact that
a lot of young people, what for their parents would
have been the down payment on a home right now is going to
service their student loan debt. So I know that Zillow
is focused on housing and not college education, but I will say that some
of the initiatives that I’m putting forward to
drive down the cost of college and the debt burdens
that young people have when they get out of school
can make a huge difference in the housing market
over the long term, because the
$30,000 or $25,000 on average that young people
from state universities are coming out with
in terms of debt, that’s a down
payment on a house. And so we’ve got
a whole range of ideas about how we can
drive tuition down, work with universities
to be more efficient, help young people
graduate faster so that they’re not ending up
spending more money, reducing the interest
rates on student loans. All that will have an impact
on the housing market. I should add, by the way,
there’s another issue that doesn’t seem like it’s
related to the housing market, but actually is related, and that’s immigration reform. We know that if we get
immigration reform done, suddenly you’ve got
all kinds of families coming out of the shadows,
paying taxes, paying penalties, but they’re also going to be
really likely to buy homes, oftentimes in some
of the neighborhoods where you have the most
foreclosures, the most trouble. They add value to a community,
increase property values. And over the long term, it’s
one of the reasons why it’s estimated that immigration
reform would actually add a trillion dollars
to the overall economy, partly because they’d
be buying houses. Mr. Rascoff:
It’s what’s so interesting about
the housing industry overall is it impacts
all these disparate issues from immigration to student
loans to the global economy. The President:
Well, part of —
and the reason is, is because this is where most
Americans have their wealth. Mr. Rascoff:
It’s where our wealth is. Yes. (laughter) The President:
So if you’ve got trillions
of dollars tied up in housing, if we get that right, then it makes a big
difference everywhere else. Mr. Rascoff:
All right, so the
big one, GSE reform. This next question
comes in from Steve from Bloomington, Minnesota. And Steve writes:
“If Congress is successful” — and if you’re successful — “in scaling Fannie Mae
and Freddie Mac down, what model fills the gap?” The President:
Well, we are fairly
unique in the sense that most advanced developed
countries don’t have such a large government presence
in the housing market. Traditionally,
Fannie and Freddie were supposed to be subsidiary
to the private marketplace. And prior to the
Great Recession, in fact, Fannie and Freddie’s
portfolio was as a total a smaller percentage
of the overall lending that was taking place
in the housing market. Now it’s significantly
higher, right? And what we’ve tried to do is to
make sure that we’re providing the support we need to help
the housing market heal, but recognize you
can’t have a situation in which the government
is underwriting and guaranteeing all the mortgage lending that’s
taking place around the country and big profits are being made by these
quasi-private institutions, and then if things go wrong, suddenly taxpayers
are on the hook. So a couple of things that
we’ve done administratively, we’ve been trying to reduce
the portfolio each year by an incremental amount so — Mr. Rascoff:
The loans owned
by Fannie and Freddie. The President:
— loans owned
by Fannie and Freddie — not too quickly, but allowing
the market to catch up. Our long-term goal is to say
let’s have the private market get in there and
provide those loans. And what the government can
do is to step in to make sure, for example, that there’s still
a 30-year mortgage available; to make sure that homes that are
not too upscale are available for young families,
for veterans, for folks who may have
some limited means, but have saved and scrapped and are ready to
go out there and buy. But, for example, we increased
the maximum home value that could be financed
in the midst of the recession because it helped
to strengthen homes. Now we’re starting
to scale that back. And we’re actually confident
that the private market can step in, do a good job, and
the government can be a backstop so that we still
have affordability and 30-year mortgages, but it’s not the
dominate player. And in some ways, it’s a
return to earlier models. The way to think
about it I think is that during both the
housing bubble and its aftermath Fannie and Freddie
just got too big, and that was anomalous — that was not sort of
typical of what’s happened during the course of our
history in the housing market. So the good news is that
you’ve got a bipartisan bill — Senators Warner of Virginia
and Corker of Tennessee are working together. The principles that they have
announced are ones that are pretty consistent with me: Let’s
have the market get in there. Let’s make sure you don’t
have a “heads I win, tails you lose” formula
for Fannie and Freddie, so that taxpayers
aren’t left on the hook, but we’re still focusing
on affordability; we still are focused
on a 30-year mortgage. And my expectation is, is that
if a bill passes — and I think it’s the right thing
to do for the economy over the long term — it’s still going
to be phased in. So the one thing we want to
prevent is just at a time when the housing market is getting
back on its feet that suddenly you have a big
shock to the system. This is something that would
have to be phased in over a number of years and
I’m confident could be done. And, look, lenders
can go in there and make some money doing it. In fact, you could argue that
part of the reason why a lot of first-time buyers or
well-qualified buyers are having trouble right now is that a
lot of lenders are worried that Fannie and Freddie and
the government-backed loans may end up squeezing them if for some reason buyers
aren’t making their payments. And so they’re tightening
up their status — and that the market
might be willing to take more
educated risks about the market if, in fact, you had the
private sector back in there. Mr. Rascoff: So from Fannie
and Freddie to loans not backed by Fannie and Freddie, this
next question comes from Elias. And about 30 percent of our
questions actually touch on themes that Elias asks about. Let’s watch his video. Elias:
Mr. President, what help
is available for homeowners who are looking to refinance,
but don’t have their loan backed by Freddie or Fannie? Thank you. The President:
Well, we’ve already
talked about that. That’s the HARP 3 program. And so this is something
that can get done. Keep in mind, by
the way, this would be good for the entire economy, because some of the money would
go back to building equity. But some folks would decide
they’re going to buy a new laptop for their
kid who’s going off to college, or they’d end up using that
to help finance a new car. And, as a consequence, the
entire economy would be more likely to pop, which in turn
would help the housing market and help home values. Mr. Rascoff:
So tell Elias
to root for HARP 3. (laughter) The President:
Well, don’t just root for it. Everybody who’s on Zillow,
there’s no reason why you shouldn’t contact
your congressman and say, why aren’t we doing this? This should be a no-brainer. Mr. Rascoff:
All right. Our last question comes from
Jennifer in North Carolina. Jennifer writes in, she says, “I’m a high school
teacher in North Carolina. I get paid so little that I
can’t afford my own apartment. The rent here goes
up every year, but I haven’t had
a raise in years. A fixed mortgage would be more
consistent than rising rents, but I don’t have
the job stability.” So what advice would you give
to someone like Jennifer, and how can the government help? The President:
Well, the first thing I’d say is teachers need
to get paid more. And I mean that. Look, one of the challenges
that we’ve seen is, is that middle-class families —
teachers, construction workers, firefighters — their wages
and incomes have not gone up even if their jobs
have held steady. Some of them have lost jobs. And one of the big challenges
for our housing market is making sure that not only do we have
a strong employment market, but people,
if they’re working hard, they should be getting
paid a decent wage. And a lot of what I’m doing
and will continue to do for the remainder of
my presidency is focused on how are we improving
middle-class security. And teachers fall
in that category. Now, we already talked
about the fact that renting can be a good option if we get
more affordable rental housing on the market. And there are a
number of communities that have been
doing creative stuff. There are a number of properties that right now are sitting
there not being rented — big chunks in certain cities. In my hometown of Chicago, for
example, we could be renovating, rehabbing and putting on the
rental market thousands of units that would help to
stabilize rental prices. Ideally for somebody
like Jennifer, renting for a while at a
affordable rate that allows you then to save a nest egg that
lets you then put your down payment on a home — that’s
traditionally how folks did it. It’s nice if your parents can
help you or your grandparents. But for folks like
Michelle and I, who didn’t come from a fancy
background — actually we lived in Michelle’s mom’s house
for a couple of years. Mr. Rascoff:
Just like Jacob. (laughter) The President:
Just like Jacob —
before we were able to get the down payment together. And that’s how we do things. So just one closing
comment, Spencer. I think you guys have
done a great job in helping to make consumers more empowered
when they are buying a home, selling a home. And it’s a wonderful service. One of the things
that we’re really proud of is the Consumer
Finance Protection Bureau that we’ve put together, headed up by Richard Cordray, a former attorney
general in Ohio. And the CFPB, as we
call it, its entire job is how do we help consumers
so they get a fair deal. One of their
key focus areas has been on home finance and mortgages. And we can expect that we’re
going to try to simplify mortgage as soon as the fall,
so that you don’t have a lot of fine print, you know
exactly what you’re getting. Somebody who’s involved in a
transaction can operate with some complete transparency; they
can know what they might owe once they get a mortgage
potentially approved. The more knowledge
consumers have, the more empowered they’re
going to be and the more likely they’re going to be to live out
the American Dream that I think all of us want to see
not just for ourselves, but for our kids
and our grandkids. Mr. Rascoff:
And we have been big fans
of what the CFPB is trying to do with mortgages and
we’ve actually been working with them and giving
them comments on it. So Zillow is all about
transparency of information, empowering consumers. And so, certainly if we can
make it easier for people to understand the
complexities of a mortgage, then that would be
great for the country. The President:
Absolutely. Well, you guys have
done a great job. Mr. Rascoff:
Thank you. Thank you very much,
Mr. President. And a big thank-you to the
thousands of Americans who submitted questions. I hope this conversation
answered a lot of them. And Zillow is honored to
have hosted this event. Thank you.

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