Friday, January 09, 2009

Economic Recovery starts with Housing

The new Congress has been sworn in and it’s all about the economy and how to fix it. Or so they claim.

Wheels are turning. Make that spinning. We’re going nowhere in a hurry.

So allow me to offer a starting point: Housing.

Fact: Good people want to buy houses from people that want to sell them. Or buy homes to rent to others. But they want to BUY.
Problem: The system is such a mess, they can’t. Even the most qualified of potential buyers.
Result: Chaos.

The political pendulum has swung from “Anything Goes” to “No Way” since the system crashed last fall.

How about swinging back to the middle? The way buying and lending used to be; fair and equitable terms for qualified people. Apply the same rules for all borrowers and lenders. Then enforce them.

Your mortgage payment shouldn’t be more than 1/3 of your income. Your income must be verifiable and you have to show a proven and stable record of paying your bills on time.

Down payment? Absolutely! But how about 10-15% instead of 40%? This should apply to both homes to live in, and investment properties. Let’s peg the interest rates at no more than 5%. This will result in performing loan portfolios for lenders. Lenders like that.

Let’s provide this additional inventive for investment property buyers: No Capital Gains Tax on proceeds if the house is sold within ten years of original purchase.

Now for the easy part: It will work now. It will work tomorrow.

Once we get qualified buyers into houses, there will be a positive impact on our economy. These homeowners will buy new carpet and drapes. They’ll install cable or satellite TV. Maybe even buy a new TV and sofa. They’ll buy building materials to expand or improve their property and hire trades people to fix anything from a leaky faucet to repairing a roof.

All this creates jobs. Good jobs.

Let’s dispel a myth right now. Government doesn’t create jobs. Government’s responsibility is to make it easy for free enterprise to create jobs. That means private investment. Investment requires capital. Capital should be made available to responsible people. Investment doesn’t guarantee success. But success shouldn’t be punished either.

Government is pouring billions of dollars into banks. Let’s just attach one string. The banks have to make this money available for investment. A trillion dollar deficit isn’t the answer. A trillion dollar investment in real estate is. Not by government, but qualified and responsible buyers.

This has been the core of this nation’s economic success for over two centuries.

It is so frustrating to see Washington deal with the most complex problems because they can’t see how easy the solutions can be. How did Washington get to this point? Where did Washington lose its way? Where did Washington get the idea that printing money that doesn’t exist can be a solution to anything?

Washington needs to listen to folks like you. Call, write or e-mail. Flood Congressional Offices with your voice. Let’s all make our voices heard, loud and clear.

Let’s move forward by looking back at what worked so well in the past and will work in the future.

Please stop printing money we don’t have. It’s not as complicated as Washington is making it.

Problem solved. It starts with us. If government will let us.

John W. Scherer
John is CEO and founder of Video Professor, Inc.
You can reach him at