In the midst of America’s most devastated housing market, the real estate crisis was one obvious issue that wasn’t atop the agenda at the Republican presidential contenders’ debate in Las Vegas Tuesday night, leaving unclear the candidates’ opinions on whether the federal government ought to play a role in rescuing Americans who are stuck in homes that are worth less than their mortgage balance.
For the first hour of the debate Mitt Romney’s house in Belmont, Mass. loomed larger than the foreclosed houses which are only a short drive from the debate venue in Las Vegas. Texas Gov. Rick Perry sparred with Romney over whether he’d employed illegal aliens to do work at his Massachusetts home.
But Nevada voters were probably more concerned about their homes than Romney’s. In the third quarter of this year, Nevada had the nation's highest foreclosure rate.
Romney, businessman Herman Cain and Rep. Ron Paul of Texas all lauded free market principles during the debate but never really confronted one of those principles: prices can go down as well as go up. As many Americans have learned in recent years, a house is sometimes worth less than what you paid for it.
Should the government seek to regulate those price movements, and if so, when and why? The GOP contenders offered few answers Tuesday night.
Nevada’s housing bust followed an exhilarating boom: According to the Census Bureau, between 2000 and 2010 Nevada was the state with the highest percentage increase in the number of housing units, at 42 percent.
But Nevada has been also the state with the largest percentage-point increase in the housing vacancy rate, jumping from 9.2 percent in 2000 to 14.3 percent in 2010.
According to the financial data analysis firm CoreLogic, three out of five homeowners in Nevada are “upside down,” meaning that borrowers owe more on their homes than the houses are now worth and giving Nevada the dubious distinction of also leading the nation in that category.
Little was said about these facts during the debate – despite the efforts of a questioner in the audience who asked, “Those of us who own property here in Nevada have been devastated by the real estate bubble. What would you do as president to help fix the overall problem of real estate and foreclosures in America?”
The first contender to get a chance to answer that question was former Pennsylvania Sen. Rick Santorum. He came up with a restatement of the obvious, “the market has been decimated. So now you’re looking at: how do you repair?”
He never did answer his own question, instead veering off into a scrap with Perry for allegedly having supported congressional passage of the Troubled Assets Relief Program in 2008. (Some of the money for the federal aid to distressed homeowners, the Home Affordable Modification Program, or HAMP, comes from TARP.)
“People who did things that were wrong, invested in things, took risks, were bailed out. And the folks who acted responsibly are now getting hurt because their houses have gone down in value. We need to let the markets work,” Santorum said.
A few minutes later Romney echoed that idea, “the right course is to let markets work.”
Getting the economy growing faster is the right way to help distressed homeowners, Romney contended. But neither he nor Santorum grappled with the problem of the homeowner in the Las Vegas suburbs who may want to move to a state where the unemployment rate is lower than Nevada’s 13.4 percent– but cannot because he cannot sell his house.
None of the candidates dealt with the effect that the housing slump has had on worker mobility in America and none offered any opinion on whether the Obama administration’s HAMP or the Bush administration’s foreclosure prevention efforts were effective or not.
Romney has offered a 160-page economic program which does not offer any specific solutions to the housing crisis and in fact barely mentions it.
Romney was much more forthcoming earlier Tuesday by saying in an interview with the Las Vegas Review-Journal, “Don't try to stop the foreclosure process. Let it run its course and hit the bottom. Allow investors to buy homes, put renters in them, fix the homes up. Let it turn around and come back up. The Obama administration has slow walked the foreclosure processes that have long existed, and as a result we still have a foreclosure overhang.”
Romney’s approach brought him instant criticism from Democrats and it may reappear as an issue in 2012 if Romney is the GOP nominee. But it didn’t really get any kind of debate Tuesday night.