President Barack Obama’s first-year grades have dropped significantly in the subject of the U.S. housing market, a survey by California-based Trulia.com showed Tuesday.
The president has not lived up to his promise to stabilize the housing market, Trulia Chief Executive Officer Pete Flint said in a conference call.
Obama received an “A” or “B” from 37 percent of respondents to the January survey conducted by Harris Interactive, compared with 54 percent in February 2009. Thirty-eight percent gave him a “D” or “F.”
“Housing obviously touches many facets of the economy,” Flint said. “Homes continue to lose value, and we’re on pace for record foreclosures in 2010. President Obama has fallen short on bringing stability to the housing market in his first year in office.”
The only reason foreclosure filings didn’t exceed 3 million in 2009 was because lenders were overwhelmed with the administration process, not because of the president’s $75 billion Home Affordable Mortgage Plan, said Jonathan Miller, principal of Miller Samuel real estate appraisal and consultants in New York City.
Since Obama’s election, the nation’s unemployment rate has increased from 7 percent to 10 percent, foreclosures increased 21 percent and median home prices fell 12 percent. On the other hand, home sales volume increased 15 percent, mortgage rates have stayed around 5 percent and inventory has declined from an 11-month supply to seven months.
Despite the lower grades and troubles that have continued to plague the housing market, the survey found that the dream of homeownership is still alive and well, with 77 percent of Americans believing they can achieve that goal.
“There is no easy fix and we’ll see a long road ahead before we see a stable market,” Flint said. “We’ll continue to see volatility in the housing market in 2010.”
Separately, the Standard & Poor’s/Case-Shiller 20-city home price index inched up 0.2 percent in November to a seasonally adjusted reading of 145.49. The index was off 5.3 percent from November 2008, nearly matching analysts’ estimates that it would fall by 5.1 percent.
Fourteen of 20 cities in the index showed gains from October to November. The index is now up more than 3 percent from its bottom in May, but still 30 percent below its May 2006 peak.
In Las Vegas, prices edged up 0.1 percent, the first month-to-month increase since January 2007. Still, prices are down 56 percent in Las Vegas since peaking in April 2006.
“This has been a roller-coaster year, to say the least, and I don’t think we’re done with the ride yet,” Miller said. “Some of it occurred before Obama took office and some of it is new.”
The key issue is keeping Freddie Mac and Fannie Mae afloat and increasing Federal Housing Administration lending with 31/2 percent to 5 percent down payments, he said.
Also, the first-time home buyer tax credit played a critical role in driving sales activity. It’s evident the housing market “can’t stand on its own two feet” without government intervention, Miller said.
Howard Glaser, principal of Washington, D.C.-based The Glaser Group, said the housing market, at least for the moment, is showing some signs of stability.
Federal intervention was “very significant and necessary,” he said, with $2 trillion spent just on housing.
“It’s like putting the housing market on heroin,” Glaser said. “We’re becoming addicted to it and it’s going to be hard to wean off intervention.”
As for the loan modifications, Miller said the only way to see large-scale improvement for homeowners “under water” on their mortgages, or owing more than their house is worth, is for some type of debt forgiveness. Otherwise, default rates are going to be unacceptable, he said.
Glaser said there have been some principal write-downs, mainly from investors who acquired loans from the banks.
“The vast problem is with secured loans. No amount of loan modification is going to have a significant impact on those,” he said.
There may be more “strategic nonforeclosures” this year as lenders allow homeowners to stay in their homes and at least pay property taxes and maintain the homes, Miller said.
Contact reporter Hubble Smith at firstname.lastname@example.org or 702-383-0491.