To say it’s been a busy year for the National Association of REALTORS® (NAR) would be an understatement. From juggling the impacts of the pandemic to vying for investment in housing in Washington D.C., the association has had its hands full throughout 2021.
Hundreds of real estate professionals gathered to hear the latest updates on federal issues impacting the industry during NAR’s annual REALTOR® Conference & Expo at the San Diego Convention Center in California.
Co-presenters at the session included Shannon McGahn, NAR’s Chief Advocacy Officer, and Bryan Greene, Vice President of Policy Advocacy at NAR.
Kenneth Fears, NAR’s Senior Policy Representative for Banks, Lending and Housing Finance; Sarah Young, Director of Real Estate Services and Policy Oversight at NAR; and Evan Liddiard, Director for Federal Taxation at the NAR were panelists at the meeting as well.
McGhan kicked off the session with a comprehensive look at the organization’s advocacy progress toward improving access to homeownership, building resilient communities and pandemic recovery.
“I’m pleased to report that despite a pretty challenging environment, we have made resounding progress and success on all fronts, and we’re expecting even more by year’s end,” McGahn said.
Part of that progress came in the form of the recent approval of the bipartisan infrastructure bill that president Joe Biden signed into law on Monday, November 15.
Regarding the coronavirus pandemic, the NAR has continued to support the allocation and distribution of nearly $50 billion in emergency rental assistance to help financially distressed tenants and housing providers to make ends meet.
McGahn also noted that the association had made substantial strides in fighting discrimination in the industry by pushing essential fair housing bills forward, including the Equality Act, the Mapping Housing Discrimination act and the Fair Lending Act.
“Our advocate agenda has been quite a tall order, but our modernized advocacy operation has proven to be able to take on any challenge, even a once in a lifetime crisis,” McGahn said. “We always have our eyes on the issues of tomorrow. Our strength is in the 1.5 million members.”
Greene echoed similar sentiments before leading a panel discussion with NAR’s policy advocacy team.
“The year has really been some year, and it began as sort of a tidal wave amid a perfect storm when you consider that we had a pandemic at its peak,” he said. “It has been surprising when we look back at what we accomplished this year and how remarkable a year it was amidst all of the challenges.”
Dodging a tax bullet
Liddiard suggested that the industry “dodged a bullet” with a series of tax increase proposals that threatened real estate professionals.
“We were looking at a very ugly situation as far as the tax increase proposal to pay for the trillions of dollars in new spending that was proposed,” Liddiard said, pointing to proposed limits or elimination of 1031 exchanges at the start of 2021.
While he assured the audience that he was “confident that 1031 is off the table,” Liddiard claimed that was only the tip of the iceberg of potential tax increases.
“We’ve never seen a year like this as far as threats of tax increases that would affect real estate,” he said.
Liddiard highlighted a list of proposals—which he called “the ugly 11″— that were introduced between spring and summer as a means to pay for trillions of dollars in spending.
The list included sizable increases in the capital gain tax rate for those making over $1 million, proposed taxation of unrealized gains, and a net investment income tax change.
“I’m the first to caution that the process is not over with,” Liddiard said.
Despite the potential threat, Liddiard said he was confident that most of the proposals were dead. The one exception is expanding the net investment income tax for those making $400,000 to $500,000.
“I think there is only about a 40% to 60% chance that we’ll even see the Build Back Better bill enacted into law,” Liddiard opined. “It still could fall apart, and we could see nothing on this.”
Build Back Better Act
The discussion shifted to focus on infrastructure spending again as Young dove into aspects of each bill that would benefit the real estate industry.
While Young indicated that NAR had supported both spending bills, the Build Back Better Act has garnered the most attention, especially from the real estate industry over the last few months.
As Congress debated making significant cuts to the legislation, NAR CEO, Bob Goldberg, also joined a broad coalition of housing advocates to stress the importance of keeping housing provisions in the bill.
“The bill is not done yet, so it is possible that they could start jettisoning some of these provisions off,” Young said.
The $1.9 trillion spending bill cleared a major hurdle on Friday after the House approved the legislation in a 220-213 vote. The social spending package contains nearly $150 billion proposed housing-related provisions.
Among the proposals in the bill that (NAR supports) would be a boon for housing, Young pointed to down payment assistance for first-generation homebuyers, grants to state and local governments to create affordable housing solutions.
Considering that the Senate passed the infrastructure bill at the time of the session, Young was hopeful that the “social infrastructure package” could pass as well.
“We made the point to them that housing is bipartisan,” she said. “It’s an important issue that both sides of the aisle can agree on. It’s critical as we’ve seen especially during the pandemic to stimulate our economy.”
Regulatory Changes
With a new administration in Washington, NAR has also been bullish about advocating for real estate professionals’ regulatory interest, mainly regarding lending and fair lending issues.
While Congress and the framework of both infrastructure bills have captured headlines, Fears noted that regulator activity over the past eight months has also been noteworthy.
“There have been a lot of changes since the administration chain came in, and these come in three flavors,” Fears said, noting that the first accounted for the easing of pandemic-related support for distressed homeowners like the foreclosure moratoriums.
During debates and legal battles over moratoriums implemented by the Center for Disease Control and Preventions (CDC), Fears noted that regulators “quietly pulled back” on the moratoriums to slowly start allowing the flow of REO’s that are already in the system or foreclosed homes back to the market.
“This is really important for our members because if we have a hard landing on this, we could see a significant amount of inventory come back to market quickly, which could undermine price stability and confidence,” Fears said.
The FHFA has also taken action to make sure that these homes come back to owner-occupants.
Fears highlighted a January 2021 decision by the Federal Housing Finance Agency (FHFA) to limit the number of second and investor homes and loans to borrowers with multiple risk factors, like first-time homebuyers.
“These limitations immediately had an impact, and they also run counter to the whole reason that congress chartered Fannie Mae and Freddie Mac in the first place,” Fears said.
He indicated that NAR worked with the FHFA to eliminate the caps, which he claimed helped the flow of finance to the housing market and restored that flow and access.
The last set of changes focused on fair lending and fair access by expanding opportunities in financing to groups that haven’t gotten to it for varying reasons.
Shortly after its shift in leadership, the FHFA announced that it would partner with the U.S. Department of Housing and Urban Development (HUD) to focus on enhancing its enforcement of the Fair Housing Act.
“This isn’t new regulation,” Fears said. “It’s just enforcing transparency in the market and making sure that people who are creditworthy get that financing. This is about enforcing the people that are credit worthy getting the financing that they are due.”
“Equality is about making sure that the door is open,” Fears continued. “Equity is understanding what differences in people’s experiences hinder them from walking through that door, and likewise, once they’re in a home might hamper their ability to stay in it.”
For more information, please visit www.nar.realtor.
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com.
