Home costs Obama’s Achilles’ heel

Since late October 2011, I have been resolute in the opinion that President Obama cannot win reelection, primarily because of “wrong track” sentiment and the economic pessimism that drives it. Lately, there has been some positive economic news. So does this mean that all bets are off for my prediction? Hardly. There is one gnawing economic hardship that the president can’t fix before November — declining homeownership and stagnant home values — which will prove to be determinative.

We all know there is a foreclosure crisis. We see the yard signs and newspaper notices of forced sales. In the news, we hear anguished cries of those abused by financiers who pushed ahead in haste, sometimes improperly, with foreclosure proceedings. The president has an initiative to help a handful. But I’m not sure that most observers are adequately weighing the political impact of foreclosures. Consider Florida, a key swing state. RealtyTrac, a research service, reports that there are 24,783 properties in Florida caught up in foreclosure. One in every 363 housing units in the state received a foreclosure filing in January of this year. The foreclosure rate for mortgaged homes is higher than the state’s unemployment rate. When Florida’s jobless rate fell below 10 percent, Democrats in the state crowed that Obama’s prospects were sunnier. But nary a word about the housing mess that affects far more voters.

The key to understanding the intransigence of Obama’s housing problem is to look beyond the foreclosure numbers to the larger impact on home prices generally. The aggregate loss of housing value in this country far outweighs the costs of the banking crisis and other economic catastrophes of the past four years. To turn a phrase, housing values are close to home. Every man has been hurt. A Gallup poll taken in January found that 57 percent of homeowners expressed worry that the value of their property will not increase this year. Increase? Homeowners will be lucky to hold their ground. An outright decrease in property values is what some homeowners should expect. A recent Reuters survey of economists and real estate analysts concluded that the real estate swoon has bottomed out, but the respondents weren’t ready to predict a turnaround yet. 

It gets worse when you look at the numbers in swing-state markets. There, the decline in real estate values isn’t done yet. While the Miami-Fort Lauderdale markets are rebounding, Housing Predictor, a research service, says that every other part of the state will continue to lose value. Home values in Tampa, a key swing market, are expected to decline by another 5.3 percent this year. In other swing states, Housing Predictor foresees much of the same: Columbus, Ohio, 2.1 percent; Dayton, Ohio, 3.8 percent; Indianapolis, 1.9 percent; Kansas City, Mo., 3.6 percent; St. Louis, 4.6 percent; Springfield, Mo., 2.4 percent; Albuquerque, N.M., 5 percent. And bear in mind that these declines are on top of the losses already suffered over the past four years.

Many Americans saw their “liquid asset” retirement funds decimated by the broader financial meltdown, in most instances leaving them in a situation where their homes are their single greatest asset. And now they are forced to sit and watch while even that asset slowly dwindles. Heck, the stocks were sold and don’t show up in the annual financial report anymore to mock you. Yet many Americans still receive periodic updates from property appraisal authorities reminding them that their property values are down. For many, this means lower property taxes, but the joy is muted. Most would prefer to have their property values back, my own polling suggests.

Gallup polling shows that 66 percent of Americans own their own homes. These owners are likely to be a significant bloc voting for change, hoping that their greatest investment will once more gain value.

David Hill is a pollster who has worked for Republican candidates and causes since 1984.