Total existing-home sales—completed transactions that include single-family homes, townhomes, condominiums and co-ops—rose 3.1% from December to a seasonally adjusted annual rate of 4.00 million in January.
Five Questions With NAR President Charlie Oppler
Charlie Oppler took over as president of the National Association of Realtors at a pivotal time for the national organization and for the nation’s real estate industry as well.
With the advent of COVID vaccines and mass distribution now underway, the 1.4 million NAR members and the nation are beginning to adjust to what will likely be the “new normal” in how people live their daily lives and how they conduct business in a post COVID-19 environment.
The 62-year-old veteran Realtor who is CEO of Prominent Properties Sotheby’s International Realty in Franklin Lakes, NJ, made headlines shortly after his installation last November as 2021 NAR President when he offered an apology on behalf of NAR for its past practices that he said contributed to segregation and racial inequality in America.
“What Realtors did was an outrage to our morals and our ideals. It was a betrayal of our commitment to fairness and equality. I’m here today, as the president of the National Association of Realtors, to say that we were wrong,” Oppler said. “We can’t go back to fix the mistakes of the past, but we can look at this problem squarely in the eye. And, on behalf of our industry, we can say that what Realtors did was shameful, and we are sorry.”
NAR initially opposed passage of the Fair Housing Act in 1968, and at one time allowed the exclusion of members based on race or sex. “Because of our past mistakes, the real estate industry has a special role to play in the fight for fair housing,” said Oppler.
Real Estate In-Depth recently talked with the affable NAR President to lean his views on key matters, particularly due to the fair housing issues New York Realtors are facing at the moment, and the plethora of other pressing matters that will impact the industry in the coming months and years as the nation looks to inoculate the nation and the economy against the coronavirus pandemic that has killed well in excess of half a million people nationwide.
Real Estate In-Depth: A repeal of the SALT deduction has been introduced in Congress recently. Will NAR fight to reinstate the full SALT deduction?
Oppler: The $10,000 cap for state and local taxes became really a point of contention between the parties and it is even more a source of contention now that the Democrats are in higher-taxed states. The problem is that with the new (Biden) administration, you have Democrats in higher and lower-taxed states and you have a little bit of conflict within their own party. The key to it for me is that the current tax code penalizes families who file taxes on a joint return. With the new SALT deduction, you are limited regardless of how you file so in essence you are penalizing the family formation. So, ultimately if we decide to support the fight on Capitol Hill to secure the full federal income tax deductibility of state and local payments, we are going to have to put special emphasis on finding a bipartisan solution because it is in fact so partisan right now. So, that is a big concern for us and we certainly recognize the difficulty of fully repealing it because of the lack of common ground on anything in D.C. right now as evidenced by the $1.9-trillion stimulus package that may come down to another vote by the Vice President (in the Senate). Editor’s Note: The interview with NAR President Oppler was held prior to the passage of the $1.9-trillion American Rescue Plan.
That is what we are up against. But, I think the first fix for us is the marriage penalty in the SALT Cap by allowing married couples to deduct up to $20,000 instead of the $10,000. That would be the first solution and we are pretty sure we can get overwhelming bipartisan support on that. Then, I guess the last part about SALT right now would be that if we looked for the maximum cap to (be changed to) $20,000 for joint returns and indexing, that might be the solution because of the fact that there are so many properties that have high property taxes. If we can eliminate the marriage penalty it doubles the maximum penalty up to $20,000 for joint filers and we can do some kind of indexing the cap for inflation, then that might be a short-term and bipartisan solution.
If I look at the big picture, you try to get the best outcome for short-term and long term, because if we can get some kind of adjustment, you don’t want it to be back on the table in two years when (or if) there is a change (in leadership in Congress)… If we push for the full repeal, it becomes a negotiation anyway, so we are going to look to do something that we think we can have some success with.
Real Estate In-Depth: There have been proposed changes to the independent contracting status regulations. What is your position on those changes going forward and have you held discussions with the Biden administration on their impacts to Realtors?
Oppler: I know our lobbyists and our staff in Washington, D.C. are always concerned about independent contractors. Real estate sales agents have a statutory provision in the I.R.S. Code (Section# 3508) and this has been in place since 1984. So, we obviously 100% oppose any erosion of the provision in the Tax Code or anything that has to do with not being classified as independent contractors. We understand that every business has changed, but for us this is a big one and really what is important that the Department of Labor has a change in its rule that goes into effect March 8, 2021, which gives more clarity on how an employer can classify his or her worker, but obviously we don’t think it has any impact on us.
Now, part of the problem here is that you also have a number of states statutes that follow the policy set by the federal government as far as how we are classified as independent contractors, but then you get into issues about workmen’s comp and other statutes when you are starting to qualify licensed real estate as independent contractors. In other words, we are just making sure that any action taken by the Department of Labor would avoid any changes to our classification as an independent contractor.
Editor’s Note: NAR President Opler noted that NAR was very involved in securing protection for independent contractors, commission workers to get the $600 federal unemployment stipend. He stressed that NAR believes sales agents are independent contractors and NAR will fight to ensure that there will be no change to that classification.
Real Estate In-Depth: The President recently extended the foreclosure moratorium and mortgage forbearance through June 30. Will NAR push for mortgage debt forgiveness, assistance for residential and commercial landlords impacted by those moratoriums and/or other aid proposals geared at bolstering the housing market in response to the pandemic?
Oppler: We were pleased to see the administration continue to protect housing for those that are vulnerable because I think nobody thought the pandemic would go this long and it certainly has been disruptive for so many people. Not only does it (moratoriums) provide security for those at-risk of foreclosure, but also provides stability for us in the broader residential market. So, in other words, the last thing we need is to lose that forbearance and have people default and have an overwhelming amount of short sales or foreclosures. That doesn’t bode well for real values of properties. In the latest COVID relief bill, the exclusion from income from mortgage debt forgiveness is extended for five years. That is huge, but the maximum amount is reduced from $2 million to $750,000. So, there is an adjustment, but most mortgages in this country are $750,000 or less.
The most important part in that same legislation is the $25 billion in rental assistance for housing providers. Many of the owners of property are Mom and Pops. NAR research has shown that 38% of Realtors own at least one rental property and on top of that 40% of rental units nationally are owned by Mom and Pops. That is why the assistance has to go to the provider as well as for the protection for tenants. It can’t just be one way…
Editor’s Note: NAR President Oppler said that NAR will be looking to work with the Biden administration to increase the national homeownership rate. In terms of further COVID housing relief, the NAR President said the association would be supportive of more banks offering FHA financing. “It is our view that we need to make sure that the mortgage insurance premiums for loans over 90%, which have penalized home buyers for not being able to put down the larger down payment, has to be eradicated,” he said. “That hurts so many buyers coming into the market.”
Real Estate In-Depth: Will NAR support the government’s role in the GSE debate?
Oppler: I don’t know that support is the right word. In 2019 we formally proposed a utility model for Fannie and Freddie. Our overall perspective is that if the pandemic had gotten worse and if the GSEs would not have been effective in protecting the real estate market, we would have been in bad, bad shape as a country. So, that certainly would have been super important at that point. Fannie and Freddie and the GSEs support over 80% of the residential market in the U.S. That is how essential they are to the success of our business and they still get special treatment from the government to meet the needs of the underserved markets to maintain liquidity at all times. For us, the utility proposal would ensure Fannie and Freddie continue to fulfill their charter mission to every customer. So fair housing becomes a big play there… You want to make sure that whatever you do with Fannie and Freddie that they can attract investors, minimize taxpayer reach, keep costs down and make mortgages affordable if they were to transition into a utilities market versus the conservatorship that is now held. The positive part right now is that because of the GSEs, a home buyer in Springfield, MO and a buyer in Springfield, MA, two completely different markets, have equal access to a mortgage and pay nearly the same rates. That becomes critical.
And the last and most major concern is that without the GSEs, if they did not exist, rates would be higher in normal times, access would decline because of credit and the 30-year fixed-rate mortgage as we know it would not be widely available… So that is why in our view we support the utility model, which allows for private capital investment, but still protects taxpayers from a bailout as we were stuck with way back when.
Real Estate In-Depth: Almost immediately upon taking office, you issued an apology for Realtors’ past Fair Housing practices, calling them “an outrage to our morals and our ideals” and “a betrayal of our commitment to fairness and equality.” What reforms or initiatives are planned by NAR this year to further fair housing in the U.S.?
Oppler: The apology that I offered to me was a pretty simple decision. The old Chinese proverb: “When is the best time to plant a tree: 20 years ago. When is the next best time: now.” I looked at the history of NAR and the Fair Housing Act and our lack of support and knew that the homeownership rates in the African-American community being as low as they were that quite frankly the banking community and the real estate community were part and parcel of that problem. So, I think by acknowledging it and saying the association played (a role) in contributing to the segregation and racial inequality in America was important. I think it allowed a lot of us to move forward. Today, we have a President’s Challenge to our Leadership Team, Board of Directors, state and local leadership to become better educated in Fair Housing. They have taken a simulation called “Fairhaven,” a video on implicit bias, and we have over 1,000 members taking it and an “At Home with Diversity” designation course. So, we are committed to what we do better.
Some of the (fair housing-oriented) things we have done is visited HUD in 2020 to discuss things we could do better as an association and we spent the last year implementing what we call our fair housing initiative “ACT,” which stands for “Accountability Culture Change and Training.” We have also partnered with the U.S. Chamber of Commerce on the “Equality of Opportunity” initiative and we continue to work with them to make a broader national effort to look at why the economic inequality exists and how do we advance inclusion?
So, there is no way to go back in time to correct or rectify the mistakes we have made, but we can be the leaders going forward in trying to have our 1.4 million members help benefit everybody with the American Dream of homeownership. I think we can be the catalysts going forward…”