Last week in his address to Congress, President Obama unveiled a $447 billion plan to create jobs and help stimulate the nation’s struggling economy. But the issue squarely at the heart of America’s economic woes — housing — was mostly absent from the president’s speech. The proposed package instead relied heavily on targeted tax cuts, infrastructure spending, new job training assistance, and a $50 billion extension of unemployment benefits.
Breezing over the housing crisis, the president noted only that his administration will work with federal agencies to help “responsible home owners” refinance their mortgages — hardly a plan to aid the now 25% of property owners who are underwater or facing foreclosure. RealtyTrac reported 200,000+ foreclosure filings in July.
Meanwhile, 4 issues continue to threaten the housing market. Moreover, current federal efforts to resolve the foreclosure crisis through refinancing have fallen short. So far, fewer than 1 million home owners have used the HARP program, a refinancing option under the Making Home Affordable program, which the Obama administration predicted would help 4 to 5 million Americans.
The health of the housing market is crucial to job creation and necessary for recovery. Consider how housing and home ownership impacts the U.S. economy:
- Housing accounts for more than 15% of the gross domestic product, making it a key driver in our national economy.
- Housing has led this country out of six of the last eight recessions.
- Every home purchased pumps up to $60,000 into the economy over time for furniture, home improvements, and related items.
- Each home sale touches dozens of different professions.
- Home sales in this country generate more than 2.5 million private-sector jobs in an average year.
For every two homes sold, a job is created.
Over the next few weeks, expect to see pundits and economists take to the airwaves to debate the long-term effectiveness of President Obama’s plan. And rightfully so. Much of the president’s package will do little more than temporarily buffer the blow from our troubled economy. For example, an extension of unemployment benefits — currently at 99 weeks — could face attack because it doesn’t directly correlate to job creation.
Others will wonder how an additional $447 billion in stimulus will be effective when $800 billion in funds from the 2009 Recovery and Reinvestment Act failed to remedy the job market. In short, the efficiency of each proposed tactic outlined in the president’s jobs plan is debatable.
The only surefire way to stabilize the economy and create American jobs is to invest in the recovery of the housing market.
Do you think the refinancing proposal will help the housing market long term?