Denise Dersin

Editor in Chief
Anje Jager/ Denise Dersin Editor in Chief

NAHB chief economist Dave Crowe’s economic report this month is pretty chilling. We’ve witnessed annual decreases in new-home sales for more than five years now, but there’s something different, and gut-wrenching, about seeing 2011’s total sales numbers expressed as “a 48-year record low” and “barely breaking 300,000.”

A determined person can find a few bits of good news out there. For example, the NAHB’s Improving Markets Index lists twice as many housing markets in October as September, 23 to September’s 12. Builder confidence has improved slightly. Reports such as one from real estate research firm Altos Research shows housing inventories, including foreclosures, falling in all markets, and prices, while still declining, dropping only slightly. And I’ve come across a number of news reports from around the country that small, individual markets are showing signs of recovery. Even more remarkably, some builders are experiencing success even though they operate in still-troubled markets (see “One Step Ahead,” page 46).

But this is occurring with no thanks to elected officials, federal or local. Instead, builders are fighting, still and yet, the same old battles, and some new ones, over regulations. In October, the NAHB lost a six-year fight against a smog fee in the San Joaquin Valley when the U.S. Supreme Court refused to hear the case. Don’t get me wrong, I believe all of us need to take responsibility for the environment. But I’m still trying to wrap my mind around the logic of the “indirect source rule,” by which builders and developers are responsible for smog created by people who drive a lot. Clearly, the rationale has to be that it is not politically expedient for municipalities to charge drivers individually for the miles they rack up. It’s much easier to have builders do their fee collecting for them. But raising prices is the last thing builders need to do right now. It’s estimated that the rule will add another $500 to new-home prices in a state where impact fees already amount to many thousands of dollars per house.

The home building industry has long been one of most highly regulated in the country. But in these toughest of times, builders feel that they are being saddled with even more restrictive public policies, and benefits that were previously in place are being taken away. The loss of the higher loan limits guaranteed by FHA, Fannie Mae, and Freddie Mac was a blow. And now, the gang of twelve, also known as the super committee charged with finding ways to lower the U.S. deficit, will start looking at all current tax breaks for home buyers and owners, including the mortgage interest deduction and the capital gains exemption on the sale of a primary residence. The super committee will also consider new standards for home mortgages, such as a minimum 20 percent down payment. Put into place, these revisions would offer plenty of new reasons to not sell your current home or buy a new one to folks already disposed to think that way.

Having not won a battle in quite some time, housing industry executives feel completely stymied. So instead of asking for assistance that does not appear to be forthcoming, NAHB CEO Jerry Howard, in an October article in BusinessWeek, said he’s now essentially asking lawmakers to just “Shut up.” Elaborating, he said, “Stop saying we’re going to eliminate the mortgage deduction. Stop saying we’re going to require everyone to put 20 percent down on a house. Stop saying there’s no role for the federal government.”

In the Washington, D.C., area, a local builder told me that he spends several days each month testifying and talking with Maryland state legislators trying to make sure builders are being heard in the ongoing conversations about Chesapeake Bay water quality regulations. But, like Howard, he says he’s not asking for anything.

“I’m not looking for help,” he asserts. “I just want them to get out of the way.”

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