Baseball season is just geting started but America's other national pastime is in full swing: Debating the state of the housing market.
Housing bulls point to a stabilization of prices in many metro areas, overall sales at a 5-year high, a decline in the inventory of homes for sale, fewer foreclosures and record levels of affordability -- thanks to rising rental prices, low mortgage rates and the steep drop in prices since the peak.
Bears note that national home prices are still falling, albeit at a slower pace, while buying a home is unthinkable for millions of Americans suffering from bad credit, tougher lending standards and high unemployment. In addition, many experts predict a massive "shadow inventory" of homes will come on the market at the first sign of a sustained bottom and believe foreclosures will spike again now that the $26 billion settlement with big banks has been finalized.
The man who helped negotiate that landmark settlement, U.S. Housing and Urban Development Secretary Shaun Donovan, concedes there is no "silver bullet" to cure the housing market's woes.
But Donovan is optimistic about the outlook for housing and the government's action to reverse the market's downward spiral.
"There's a broader sense we are poised for a stronger, consistent recovery," he says in the accompanying video. "If we can continue to see stronger sales, cut the number of folks falling into foreclosure [and] make sure adequate credit is available, then we've set the stage for a more sustained recovery starting this year."
Housing skeptics will certainly disagree (see above) and note myriad predictions for a "bottom" in housing have all proven premature in recent years.
But Donovan sees "positive momentum" in the market for non-distressed homes and says President Obama is "doing all the right things" to help housing, citing, among others, the Home Affordable Refinance Program (HARP) and Home Affordable Modification on Program (HAMP), which have helped nearly 2 million families to date.
New incentives for Fannie Mae and Freddie Mac, among other lenders, to do principal reductions is another White House effort that could help the housing market. But the regulator for Fannie and Freddie, Edward DeMarco, continues to resist such proposals, citing the potential for moral hazard.
"This is not about some huge difference-making program that will rescue the housing market," DeMarco said Tuesday at the Brookings Institution.
When I interviewed Donovan, prior to DeMarco's latest comments, the HUD Secretary expressed some hope the housing regulator would come around to the idea of principal writedowns, given new analysis by Fannie and Freddie. (See: Fannie & Freddie Regulator Will Put Kibosh On Mortgage Writedowns: Eisinger)
Perhaps even less likely is the Congressional action Donovan said is needed to help "every responsible homeowner who's paying their mortgage but is underwater" get refinancing, as President Obama called for in his State of the Union address.
Donovan may be right about the elements being in place to revive the housing market, but it's a Herculean task that requires all levels of government to be rowing in the same direction, which doesn't seem to be the case right now.