Good Morning President Mendenhall, Members of NAR's Leadership Team, and Directors of the National Association of REALTORS®.
I've had the opportunity to speak with many of you this week, but more importantly, I've had the opportunity to listen. The message is clear, NAR needs to be a faster, smarter, more efficient, and a more responsive organization.
As I close out the first 100 days serving as your CEO, I am proud to report we are doing just that.
Take a look at the screens before you, and you'll see some of the programs and initiatives we are working on. I am excited to share with you that we are making progress!
We have a full agenda today, so I'll touch base on just a few key items.
First and foremost, it's imperative that we are not just the National Association OF REALTORS®, we are also the National Association FOR REALTORS®. Every action we take is geared to making sure our members come first.
In support of this goal, we have a number of initiatives that will bring results beginning in early 2018.
At this conference we unveiled the Executive Outreach Program, and yesterday afternoon at your regional caucus, you had the opportunity to meet the NAR Executives assigned to your region. Get to know these people, they are here to help you.
The organizational design study to redefine our staffing structure is well underway. We will create more efficiencies to better serve our members.
We are creating a new Strategic and Business Technology Group that will focus on engaging with world-class innovators to keep NAR ahead of industry disruption. NAR will seek to form partnerships with major players and industry experts that will benefit our members and improve their profitability.
We have plans to build a strategic think tank to capitalize on opportunities while mitigating industry threats.
We are also in the process of unveiling improved methods to increase member engagement, and we are making an effort to come to you rather than having you come to us.
Our plans include:
- Expanding our very successful Members Edge and Brokers Edge programs, and creating a new member-focused Tech conference.
- Implementing A Day in the Life of a REALTOR® Program so our staff will gain a better understanding of what REALTORS® do to earn a living every day.
- And, leveraging and growing our social channels because we know that our members engage clients and consumers on a variety of social media platforms.
If you haven't already connected with me, reach out! I am making every effort to interact with our members and industry partners.
Engaging and serving our members will always be our top priority, but we are also harnessing relationships with consumers. For example, this week we utilized the consumer Call for Action Program to encourage homeowners to make their voices heard.
Furthermore, we are in talks with consumer organizations to build a coalition of homeowners to join forces with REALTORS® and further our Association's advocacy strategy.
Advocacy at all levels of government is fundamental to our association's vitality. We've had tremendous success in this arena through our REALTOR® Party and grassroots initiatives.
However, it is paramount that our resources in policy, lobbying, regulatory, and for RPAC remain as competitive as possible.
So, we are strengthening our arsenal by growing the Corporate Ally Program, and we are already exceeding expectations. This program encourages third party entities to contribute to our advocacy efforts.
The most immediate advocacy challenge REALTORS® are up against RIGHT NOW, landed on our doorstep last week when House leaders introduced tax reform legislation.
This proposed legislation is even worse than expected for residential real estate.
It's evident this bill presents a Clear and Present Danger!
The question now before us is do we want to be a nation of homeowners or a nation of renters?
To answer this question, I've asked 2017 Federal Taxation Committee Chair Iona Harrison to join us this morning.
I'm here today to bring us up to date on the tax bill, which I now know threatens American homeownership.
It takes experts to navigate it's nearly 500 pages, but we have those experts, and I can tell you this is a bad bill for homeownership.
I'm a REALTOR®, and I'm not going to apologize for sticking up for the rights of homeowners and our future clients and customers.
Homeownership is not a special interest, it is a common interest and this is an all-out assault on homeownership.
So much is at stake here:
- The bill attacks homeownership and sticks future generations with a $1.5 trillion price tag.
- Homeowners in all 50 states would be double-taxed on the money they pay for state/local taxes.
- If you buy a home and then have to move within 5 years, you could be hit with a large tax bill.
- Mortgage interest deduction will be capped at $500,000
- Capital gains exemption on the sale of a primary home begins to phase out for a family income over $250,000.
- Mortgage interest deduction for second homes will be eliminated.
- There will be no deductions for moving expenses.
- And no deductions for interest on student loans. We already know that student loan debt hinders first-time home buyers.
Now that I have your attention, let's delve deeper....
The Federal Taxation Committee commissioned an analysis of a tax reform plan like the one being debated in Congress.
The analysis shows that home-owning families with incomes from $50,000 to $200,000 would face average tax hikes of $815.
Non-homeowners in the same income range would enjoy average annual tax cuts of $516.
I’ll say it again...
Millions of middle-class homeowners will see a tax hike under this plan.
Yet ironically, this plan is being called a WIN for Middle Class families.
Let me reiterate what 2017 President Bill Brown said in the New York Times, “this plan effectively takes homeownership off the table for middle class Americans.”
We've got to help folks understand the math.
To pay for lower tax rates and the increased standard deduction the tax bill scales back most existing home ownership tax incentives.
The elimination of most itemized deductions, especially when combined with the new $500,000 cap on Mortgage Loans and the repeal of most of the state and local tax deductibility, will eviscerate tax incentives for all but the elite few.
Eliminating the State and Local Tax deduction would subject all homeowners — in all 50 states — to double taxation.
Homeowners already pay 83 percent of all federal income taxes and this share could go even higher under the current reform proposal.
If you own a home, and earn between $50,000 and $200,000, your taxes could go up under this tax reform plan.
Homeowners will pay more taxes so corporations can benefit from a 43% plunge in their tax rate.
This is not right! Congress must reform the tax code AND protect middle class homeowners!
But SOME Members of Congress are saying Mortgage Interest Deduction is preserved in the bill.
So why are REALTORS® against this plan?
Again... let's do the math!
In 2016, homeownership dropped to a fifty year low.
The new limits on mortgage interest and state and local tax deductibility would continue the troubling pattern of historically low numbers of first-time homebuyers.
I don't have to tell this audience about the many ways homeownership provides social benefits to communities, increasing neighborhood stability and community involvement.
For the betterment of our society, America must continue to encourage homeownership — it's that simple!
The bottom line here is removing tax incentives means fewer homebuyers and lower home values.
These provisions that limit tax incentives for homeownership would cause home values everywhere to plunge.
Our analysis shows that enacting a tax reform plan like the one being considered could cause home values to fall, in the short run, by more than 10 percent.
10 percent is massive!
If your home is worth $250,000, we're talking a $25,000 dollar difference.
The drop could be even larger in high-cost areas. The new $500,000 limit on new mortgages will make it even worse than we expected. It will take years for home values to rebound from such a significant decrease.
A reduction in values of this size is going to push homeowners with relatively small amounts of equity underwater, which could set off a new wave of defaults, foreclosures, or short sales creating havoc for families, neighborhoods, and communities.
Simply put... this country cannot afford another housing crash! We cannot let this happen!
Homeownership is the gateway to wealth building for millions of middle-class Americans. History shows that renters generally do not accumulate wealth over the long haul.
The latest Federal Reserve data shows that since 2010, the typical wealth of a renting household has dropped from $5,900 to $5,100. In the same time frame, home-owning households have seen their wealth jump from $192,800 to $231,400.
In seven years, household wealth has GROWN more than $38,000! Folks, we are not talking about nickels and dimes here; we're talking about a year's salary for many Americans!
But the new restrictions on the exclusion of Capital Gains when selling a home devastate the equity of long-term homeowners planning to convert their equity into a more secure retirement.
This legislation is extremely troubling. There is too much at stake.
Congress, not known for speedy deliberation, is planning to move on this bill very quickly. What was released on Thursday could be very different by tomorrow. And work on the Senate bill is right behind action in the House.
This is our collective fight. We meet our challenges together — whether flood, fire, or taxes — we are there TOGETHER.
Again, the question before you today is.... Do we want to be a nation of homeowners or do we want to be a nation of renters. And I would say the answer is clear!
NOW is the time to rally our troops. We have to OWN it! We will not sit back and wait to see how this plays out.
As Directors, I hope all of you have already responded to our Call for Action. If you haven't, DO IT NOW! Take out your phones and text ACTION to 30644.
When you go back to your offices, talk to your agents; talk to your clients.
Let them know what's at risk and encourage them to respond to our Call for Action.
Members of Congress need to understand that if they're not going to stand with us, we certainly will not stand with them.
I want to thank Iona and all of you for remaining vigilant in this important fight.