Housing's Powerful Lobby Surges Ahead
You need look no further than this morning's news.
Congress, at the eleventh hour, passes an extension of the closing date on the home buyer tax credit.
It was supposed to expire at midnight last night.
Last week, at the monthly lockup for the existing home sales report, the Realtors' chief economist, Lawrence Yun, told reporters that if the closing date wasn't extended, 180,000 home buyers who signed contracts by April 30th, would lose the tax credit due to delays in closing. He blamed these delays on the tough mortgage market, new appraisal rules and the still-complicated short sale process (when a home is sold for less than the value of the loan).
So Congress tried to attach a three month extension on the closing date to other legislation last week, but those bills never passed.
But the powerful troika of Realtors, builders and mortgage bankers pushed full speed ahead, rallying the troops.
I can't tell you how many calls we got here in the CNBC DC bureau from Realtors claiming there would be "rioting in the streets" (I'm not kidding—and that was a Connecticut Realtor) and PR reps for industry types offering endless "experts" to discuss the "vital" need for the extension.
You can imagine what was going on a block up from my office on Capitol Hill.
So, lo and behold, before midnight last night, a stand-alone measure made its way through the Senate, as the House had passed it the day before. In yesterday's blog I discussed the ramifications of said extension, but today I want to stick to the power behind it, which is the subject of my final piece today in CNBC's "Housing Fix" series.
The Realtors alone are one of the most powerful lobbying forces in Washington, number one in spending in the real estate industry and 13th out of all industry lobbyists.
Add the National Association of Home Builders and the Mortgage Bankers Association, and you get a force that spent $5 million in just the first quarter of this year and is on pace to break last years $27 million tab.
"The real estate industry is a powerful force across the country," notes Sheila Krumholz of the Center for Responsive Politics. "Not just at the federal level but at the state and local level. A very politically active group of people."
Many Realtors also moonlight as state legislators, city council members, mayors and school board presidents; if you think members of Congress don't understand that, think again.
"Certainly we have been talking to more people in the past number of years than ever before," admits NAR's chief economist Lawrence Yun. "We are fortunate in terms of members of Congress willing to listen to our members."
Housing represents a lot of jobs, plain and simple, and now is a critical time for the industry.
"Right now is where the rubber meets the road," says Krumholz.
The home buyer tax credit and its extension and its closing extension were all the result of this powerful lobby. Now, as Congress looks forward to tackling mortgage behemoths Fannie Mae and Freddie Mac, you can bet these three associations will be buying their lobbyists new shoes for walking the hill.
"We have worked for over a year on a model [for Fannie and Freddie] that we introduced late last year, and its gotten really a very good reception," says the Mortgage Bankers Association's CEO John Courson. "We have been with the administration, we have been to the hill, other trade associations, consumer groups, in fact, I must say not to be too immodest, but there have been a number of plans that have come out since then, that look very similar to ours."
Government may be trying to extricate itself from the business of housing subsidies, but the industry has no such plan. Get ready for a surge in K Street spending, as housing builds itself back from the ground up.
Questions? Comments? RealtyCheck@cnbc.com