Real estate is a dynamic industry and one that’s only true constant is change. This has been evident to anyone who’s been following the industry since at least The Great Recession. And certainly the pandemic has reinforced that idea.
The industry has seen moments of extreme lows and, now, extreme highs.
Often, some of this ebb and flow in real estate is impacted by public policy. It serves as a steward that can ensure stability in the market. And behind that policy are individuals like Shannon McGahn, chief advocacy officer at the National Association of REALTORS® (NAR).
Given the weight of her role, and so much happening in real estate, and Washington D.C., we thought it would be a good time to catch up with her and learn more about what she and her team at NAR have been up to, and what critical pieces of policy real estate professionals should be monitoring.
Caysey Welton: First, tell us about your role as chief advocacy officer—both from a high level and on a day-to-day basis.
Shannon McGahn: The advocacy group supports the policies and the policymakers who support our members and the real estate industry, which is a pillar of the American economy.
Taking over the chief advocacy officer position during the middle of a pandemic was not an experience that came with any playbook. Advocacy is about real relationships, not virtual ones.
Usually, the chief advocacy officer would count steps running through the halls of Congress. But so far, day-to-day life relies more on Zooming around Congress.
The challenges of the pandemic wreaked havoc on the Congressional calendar, with massive relief bills passing one after another. Add in a power change in government, and 2021 was not for the weary in Washington.
Thankfully, NAR has an impressive team of leaders to help drive the association’s advocacy efforts.
Bryan Greene leads the policy team. He came to us from HUD, where he served as the longtime director of fair housing. This team has faced an enormous task with a new administration and congressional majority eager to enact widespread change.
Bryan and his team monitor policies coming out of the executive branch, proposing changes and new directions.
Joe Harris and Helen Devlin, both seasoned NAR and Washington pros, lead congressional advocacy. Their team educates lawmakers and advocates for the entire industry, including consumers.
On top of this work at the federal level, perhaps our most significant focus is state and local association engagement. We work on everything from local ballot initiatives to community grants to ensure our members are active at all levels.
CW: How has a role like yours changed within the organization, and what initiatives have you introduced since taking on the role?
SM: Under CEO Bob Goldberg’s leadership, we took on a mission to modernize advocacy with a renewed focus on cultivating relationships both within our organization and externally—with policymakers, industry partners, and state and local associations.
This modernization has paid off in ways that we could never have imagined as the pandemic overtook the agenda at all levels of government.
Without our established relationships and decades of educating elected officials, we could not have navigated these past two years as well as we did. And we did it all virtually—from our living rooms and basements and even a few hands-free Zoom sessions in the car, which gave me a new appreciation for how excited my dogs get to go for a ride!
Our new advocacy structure also relies on a team of political representatives that travel the country speaking with REALTORS®, GADs, AEs and communications directors at all levels. And our legislative and policy representatives use that information to take their message directly to elected officials. The lines of communication are more open than ever.
There is no such thing as a federal issue versus a state or local issue. If it impacts one of us, it impacts all of us. Collaboration at all levels is essential to our overall success.
Our advocacy operation is effective, bipartisan and truly the envy of Washington.
CW: What makes NAR’s advocacy team so unique from other trade associations?
SM: There is no other trade association in Washington like NAR for one reason: our members.
We don’t represent an industry; we represent 1.5 million individuals. They are thoughtful, civically engaged and pillars of their communities.
It is an army that equals the populations of San Diego or the state of Hawaii.
We are also the largest bipartisan trade organization in America. We live “REALTOR® Party purple.”
The roots of our advocacy successes are the REALTOR® Party model that is issue-focused, not party-focused.
Power comes and goes for political parties, but our issues stay front and center. We have friends in all political corners in times of need and normalcy.
CW: You’re approaching a year on the job, so what would you consider your biggest wins thus far?
SM: In all, six COVID relief bills passed between March 2020 and March 2021, and NAR had its imprint on each one.
We helped secure an array of benefits to ensure the health and economic wellbeing of REALTORS® during the pandemic.
The self-employed, independent contractors and sole proprietors were all eligible for new federal benefits, which was unprecedented. Many REALTORS®, mostly small business owners, could access Pandemic Unemployment Assistance, Paycheck Protection Program loans, Economic Injury Disaster Loans, and paid sick and family leave.
As lockdowns swept the country, we leveraged every relationship and resource to get real estate deemed an essential service in jurisdictions nationwide. It was a messy process, but we got it done.
As the pandemic entered a second calendar year, NAR helped secure nearly $50 billion in rental assistance in two separate bills to cover up to a year-and-a-half of combined back and future rent for struggling tenants and small housing providers.
And we supported a legal fight on the CDC eviction ban that ended up before the Supreme Court, where a favorable ruling helped protect property rights now and in the future.
Real estate makes up one-fifth of the entire U.S. economy, so our industry and NAR played a big part in the nation’s economic resilience.
There is now clear evidence that the rescue measures and programs we fought so hard for were vital to our country’s economic health.
CW: From your perspective, in terms of policy, what do you see as the most significant challenges or threats for your association members and how are you addressing it/them?
SM: Congress is debating President Biden’s Build Back Better plan that, if enacted, would provide a historic investment in the country’s social safety net. Some of the earlier tax proposals to pay for the plan could have devastated the real estate sector.
We built our advocacy operation for crossroads moments like these and worked to educate lawmakers on these tax issues for more than a year.
Our FPCs contacted every member of the tax-writing committees in the House and Senate in a targeted Call for Action.
When President Biden released the long-awaited bill framework in October, the most feared taxes and limits on real estate investment were not included. It contained no 1031 like-kind exchange limits, no capital gains tax increases, no change in step-up in basis, no tax on unrealized capital gains, no increased estate tax, no carried interest provisions and no 199A deduction limits. It was a positive development for consumers, property owners and the real estate economy.
We also feared lawmakers would strip affordable housing provisions from the bill as they worked to narrow the legislation.
Affordable housing is a key NAR priority and the key to unlocking prosperity for millions of Americans currently excluded from the American Dream. This investment is critical for closing the racial homeownership gap and addressing income disparity. It opens up homeownership for first-generation and first-time buyers.
We continued to press both publicly and privately for these provisions.
Bob Goldberg joined other housing leaders and members of Congress at the U.S. Capitol for a press conference calling for affordable housing provisions in the final bill.
And just days later, the new framework included $150 billion for affordable housing. A key member of Congress said it was because of NAR’s support.
Under the agreement, public housing and rental assistance would get funding boosts. The plan would also create more than one million new affordable rental and single-family homes and invest in down-payment assistance.
The exclusion of harmful real estate investment taxes and the inclusion of affordable housing provisions in the bill are a testament to the effectiveness of our education campaign in Washington.
CW: Without speculating too much, are there any policy issues that could become potentially problematic for real estate?
SM: Like many other sectors of the economy, supply issues are also hitting real estate. But the pandemic isn’t the only reason. The housing shortage existed before the pandemic—and will exist long afterward.
NAR commissioned a study by Rosen Consulting Group earlier this year and found the U.S. is short about six million residential housing units.
Those hit hardest are the middle class, millennials and first-time and first-generation homebuyers. It is fair to say the housing supply shortage rises to the level of a crisis. Without a coordinated, national effort, the housing shortage will persist.
We need it all: affordable, market-rate, single-family and multifamily housing.
Builders would need to exceed the long-term historical average pace of 1.5 million units a year to shrink the supply deficit.
Even at 2.1 million units a year, near the level reached in 2005, it would take a decade to close the gap.
A package of policy responses is needed to increase the housing supply. Solutions include funding affordable housing construction, preserving and expanding tax incentives to renovate distressed properties, converting unused commercial space to residential, and incentives for zoning reform.
Addressing the housing shortage isn’t just good for real estate. It is good for the economy. Expanding new-home construction to more than two million units a year for ten years would create 2.8 million new jobs and generate more than $400 billion in economic activity.
CW: Likewise, are there any new policies recently enacted, or that you’re advocating for, that real estate professionals should be aware of and embrace?
SM: On Oct. 1, FEMA’s new flood insurance pricing system, Risk Rating 2.0, went into effect for new policies.
NAR spent nearly a decade working with FEMA on this new system that prices each home individually and more accurately using modern technologies, standards and science.
So far, we see a few very high-risk, high-value properties with higher NFIP premiums under the new system. But homeowners need to know the true cost to insure these properties so they can make informed decisions.
Many other policyholders, especially those with lower-value homes, will see decreases. Too often, under the old system, low-value properties were subsidizing high-value properties.
Risk Rating 2.0 is a win for consumers. The previous 50-year-old system simply could not stay the way it was.
Caysey Welton is RISMedia’s content director. Email him your real estate news ideas to cwelton@rismedia.com.
