Last week, we waited to see who was going to blink first on the debt ceiling crisis and watched our elected officials play Russian roulette with our financial future. This was obviously the most visible example of our politicians not listening to their constituents; however it is not the only one. Anyone associated with housing which, if you think about it, is not only people that work in the industry such as developers, builders, real estate agents, but also those who own a house or a condo (which is estimated to be around 200 million of us)…were not being listened to either.

Ever since the financial crisis started in 2007, our politicos have been enacting rules, regulations and legislation which are impacting housing, and not in a positive way. Sir Isaac Newton’s third law of motion, “for every action there is an equal and opposite reaction” has been rewritten by every elected official, be it federal, state or local. The “fourth law of motion” is “for every action, there is an extreme and unnecessary opposite reaction!”

Many of us believe that housing is going to lead us out of the recession. However, there have been and are a myriad of new laws and regulations that have been or will be enacted that will potentially stymie the housing recovery:

• Onerous capital requirements by large banks which deter them from lending to our developers and builders
• Possible loss of the mortgage interest deduction
• Increase of mortgage insurance premiums on FHA loans
• Reduction of FHA maximum loan amounts
• Possible elimination of government sponsored enterprises (GSEs) which provide the conduit to sell existing loans, which in turn help create new loans.
• Unbridled regulations on the appraisal industry which is eroding home values
• Unnecessary new regulations on house and development permits, which raise the cost of housing

And the list keeps on growing!

As I recall from my history and civic days, we elect officials to represent us and carry out our wishes. What they are doing is creating an atmosphere through their “fourth law of motion” whereby there will be an acute shortage of housing and anything that is built will be too expensive for the average person to buy. We will become a nation of renters! Is that the “American Dream?”

Two weeks ago, we were all entertained by the news on the west coast about Carmegeddon. It was all you heard about and hyped as the gridlock of the century. Well, Carmageddon came and went with little more than a whimper. That being said, I am convinced that we will get through the Debt Limit crisis unscathed. But the housing crisis? Unless we rein in our elected officials, we may be headed for “Home-ageddon”.

By Mike LaRuffa