The Obama Administration needs to appoint a "housing czar" with the single purpose of clearing the market of distressed houses, a prominent West Coast economist said.
"We need easier credit standards, we need to raise consumer confidence, and a forceful foreclosure abatement policy," Ken Rosen, chair of the Fisher Center for Real Estate and Urban Economics at the University of California Berkeley, said at the Pacific Coast Builders Conference in San Francisco. "And we need one person, someone where the buck stops here, to get this done."
Rosen told the conference the nation's 20 largest banks want to get the housing fiasco behind them – "Everyone wants to get this done," he said – but that writing down the value of mortgages is an Uncle Sam issue because the government's complicated, unworkable programs are retarding the recovery.
The California economist also suggested that consumers who benefit when their loans are marked to market should be required to share with their lenders any future appreciation they might realize when the housing market finally begins to rebound. And that idea was seconded by Elliott Pollack, a Phoenix-based economist, who said mortgage writedowns "don't work" when banks take all the risk.
Pollack, who heads Elliott D. Pollack & Co., an economic and real estate consulting firm, also complained that the Federal Reserve Board's zero interest policy isn't working, either. "It didn't work in Japan and it's not working here," he complained, saying the prolonged economic downturn has morphed into a problem of consumer confidence.
The Phoenix economist doesn't expect the housing recovery to begin this year, and thinks the market "will be pretty weak" again next year, largely because there are too many vacant houses and not enough household formations.
"It will be two or three more years before the market adjusts," he predicted. "I don't see how credit standards will get any easier" until 2013 or 2014. And when it does, he told the conference, builders should "forget" housing 2000-2007 boom years. "We will never see that again," he said, adding that for a glimpse of the future, builders should "look back to the ‘70s and ‘80s."
