Senate Finance Committee on the real estate market

At the Senate Finance Committee on “The Real Estate Market: Building a Strong Economy,” Dr. Lawrence Lindsey, President and CEO of the Lindsey Group, said there are three points to stress about the real estate market. Our problems are severe, he said, and in the last 100 years there have been the development and collapse of many different housing markets. Every time there was a new approach that worked for while, and then it would fail. Today’s problems, Lindsey said, are no different.

The second point to stress is that it must be recognized this is not a “subprime” crisis but a problem that is faced by every homeowner. Because of the declines in home value, homes have become less of a liquid asset.

Third, Lindsey said, the most important thing public policy can do is to allow the development of creative solutions in the private mortgage market and avoid “one-size-fits-all” approaches.

Dr. David Seiders, Chief Economist and Senior Staff Vice President at the National Association of Home Builders (NAHB), said the United States Housing market now is in the “contraction phase” of the most pronounced housing cycle since the Great Depression. Theres is a bone fide credit crunch underway, and it appears to be worsening.

Seiders said the NAHB recommends tax policy changes to the Finance Committee, which are creating a tax credit for the purchase of a home, expanding the mortgage revenue bond program, expand the net operating loss deduction carry back, and to designate housing as an eligible investment for tax-preferred retirement accounts.

Jeffrey Schwartz, Chairman of the Board and Chief Executive of ProLogis, said that in respect to the commercial property market, there are two factors contributing to net operating income, namely effective rental and occupancy rates. The fundamental strength of commercial property markets are primarily owed to the demand for space.