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Does Real Estate Have a New Best Friend?

SPECIAL TO THE TIMES: Lehman is a Washington, D.C., real estate writer whose work appears in The Times, The Washington Post and other newspapers.

President-elect Bill Clinton is about to make the easiest housing decision of his presidency, as he prepares to move his family into 1600 Pennsylvania Ave.

Beyond that, the decisions that Clinton will make about the nation’s housing affairs become much less predictable and far more complex. However, a fair number of clues culled from his campaign and his experience as governor of Arkansas point to how U.S. housing policy may evolve over the next four years.

In the hands of a policy mechanic like Clinton, housing appears destined to serve as two separate tools: one for stimulating the economy, the other for helping mend what Clinton believes are rends in the nation’s social fabric.

As a means of jump-starting the economy, housing sales and production are among the key tools available, said Marc A. Weiss, a real estate professor at Columbia University and Clinton’s spokesman on housing issues during the presidential campaign.

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“In the short term, housing can help,” Weiss said, “but in the long term we need more manufacturing jobs and a broader-based economy.”

What’s more, Clinton appears convinced the country’s housing policy does require some fixing.

While campaigning for Clinton, Weiss blamed the Republican years in office for the lowest housing starts in four decades, sluggish home sales, stagnant or falling residential property values and declining homeownership rates.

“We want to get homes built, houses bought, affordability up,” Weiss said. “We want to do it fast and efficiently and effectively by making existing programs work . . . and by putting more money into them. We do not want to spend two years on commissions” studying the problem.

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Encino builder Jack Shine, who was instrumental in forming “Home Builders for Clinton-Gore,” a nationwide campaign support group, said he is optimistic that Clinton will rescue housing.

“If I was a betting man, I would give good odds that Clinton will make a strong, forceful attempt” to get the housing industry moving again, said Shine, who is chairman of First Financial/American Beauty Homes.

Just the prospect of a Clinton presidency has been proving good for new housing in the Southland and elsewhere, said Randall Lewis, senior vice president of Lewis Homes in Upland.

“We have had really good pickup over the last few weeks, particularly among (potential buyers) who are thinking ‘interest rates and inflation might be going up so maybe we ought to buy a house now,’ ” said Lewis, who claims no particular political allegiance.

“The rap on Clinton is that his policies will tend to be inflationary rather than deflationary,” Lewis said. “Whether or not that is good for the country, it is good for the housing industry in the short run.”

Clinton’s election is also helping sales of existing Southland homes, said Rick Merrill, president of Prudential California Realty. Not only is there more traffic at open houses, but sales for the company are up an estimated 10% in Los Angeles over the past 45 days compared to a year ago, Merrill said.

Merrill, who said he has Republican leanings, is willing to give Clinton the credit for the uptick, because, he said, buyers are convinced the incoming President will make housing an ingredient of his economic recovery plan. “Probably the country was ready for a change,” he added.

However, home builder Ira Norris, president of INCO Homes, based in Upland, a confirmed Republican, said he remains “nervous” about the Clinton presidency. Clinton’s pledge to further tax the rich and corporations will hit home builders hard, he said.

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“I understand that the middle-income taxpayer needs a tax cut, but my concern is that these people (whom Clinton proposes taxing) are the employers who make the new jobs,” Norris said.

In his native state, Clinton is perceived as supportive of the real estate industry during his years as governor. Bob Balhorn, executive director of the Arkansas Realtors Assn., characterized Clinton as “pro-real estate development, but with controls.”

However, another industry official said that Clinton as governor hadn’t dealt much with housing issues. "(As in) many state governments, once you get past the broader planning mechanisms, housing matters are decided mostly at the local level and tax matters (related to real estate) at the national level,” said Bruce Blackall, executive director of the Arkansas Home Builders Assn.

Still, both Arkansas housing industry officials give Clinton high marks for his willingness to hear them out. “Like anything else, we (did) not always get our way but the governor (was) easy to talk to,” said Balhorn, of the realtors’ group, who pointed to disagreements over beefing up renter eviction safeguards and assessment of a transfer tax to pay for historic preservation projects.

According to Weiss, Clinton will focus on the problems of first-time home buyers by making better use of the Federal Housing Administration (FHA) loan program.

Clinton intends to begin by raising the FHA loan limit to 95% of an area’s median home price, he said, rather than a specific dollar figure for the entire country.

In Los Angeles, where home mortgage needs often outstrip the current $151,725 limit, the program would become much more viable with lenders able to make loans as high as $205,000, estimates the Mortgage Bankers Assn. of America.

In Orange County, the proposed higher FHA loan limit would translate into an even more generous $226,000, according to the mortgage bankers.

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Clinton will also investigate further reducing the program’s low down payment requirements in tandem with increasing borrower credit counseling, Weiss said.

FHA also will become one of the vehicles Clinton uses to try to stimulate more rental housing construction, Weiss said. The FHA multifamily loan program was dismantled by Housing and Urban Development Secretary Jack Kemp three years ago due to concerns over rising foreclosures.

Despite the general good will with which many in the housing industry greet Clinton’s presidency, major reservations are expressed about how he will handle what some claim is the over-regulation of private property in an effort to protect the environment.

The housing lobby finds Vice President-elect Al Gore’s environmental position, as evidenced in his recent book, “Earth in the Balance,” especially troubling, said National Assn. of Realtors chief lobbyist Stephen Driesler. “Sen. Gore tends to the outer fringes on a lot of these issues,” he said.

Asked about the issue, Weiss said Clinton would “work to make sure the private owner was treated fairly.”


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