LEGISLATIVE AFFAIRS: How Debts and Deficits Could Impact Real Estate

Debts and deficits run by the federal government, despite experiencing declines over the past seven years, have been at record levels for several reasons. The lack of revenue to the government, coupled with high federal spending, has contributed to the problem. We also experienced a financial crisis that crippled our economy for many years. We now have a new president in power whose priorities include tax relief and a massive infrastructure program.

While we have recovered from the deep recession, we have benefitted from lower interest rates that kept the economy afloat and from the FHA, which kept the real estate market from going under. Now the key is to protect our hard won gains. We must make sure that the FHA is not cut in any significant way. If this were to happen it could prevent people from being able to purchase their first home. Congress may seek to curb real estate deductions for state and local property taxes in order to raise revenue. This would affect New York State homeowners disproportionately. We must remain vigilant, make our voices heard, and stop this from happening.

The new Congress will have to deal with many competing issues. As interest rates go up, payments on the debt will also continue to climb, thus leaving less money for housing and many other necessary and vital programs. Congress has yet to pass mortgage debt forgiveness so that short sales do not turn into foreclosures. In New York this is still an important issue as we still have a backlog of homes that are in the short sale process.

According to the National Association of Realtors we have a massive shortage of homes, which drives up the price of housing.  Texas never had a housing bust because they have very favorable land use regulation and a very favorable tax environment. During the down turn more the half the jobs created in the entire country were created in Texas. In order to increase affordability it is important at the local level to make sure towns do not shut down development projects and we must also to lobby for the development of more homes so that the tax burden is spread out across more and more people, thus expanding the tax base.

As the New Year begins please take the time to learn about these issues and stay up to date. As always if you have any questions or concerns you can always contact me at philip.weiden@hgar.com.

Philip Weiden
Legislative Affairs columnist Philip Weiden is the Government Affairs Director for the Hudson Gateway Association of Realtors.