New Year, New Need for Active Engagement

 Micheal Theo  |    January 13, 2010

Each new year brings new hope and excitement. But for REALTORS®, 2010 also brings a new reality that this will be an extraordinary year of big challenges and opportunities — a year in which REALTORS® must actively engage in both politics and public policy to help set the stage for Wisconsin’s future.

Our state faces major challenges in the year ahead. We have an extremely tough real estate market and (in large part because of that market) a very difficult state budget. How state lawmakers respond to these issues will greatly impact our industry.

Big challenges for real estate

Wisconsin’s real estate market is recovering but has not yet recovered. Sales volume has declined 47.4 percent from its peak in 2006. Among the biggest challenges facing Wisconsin’s real estate market today are unemployment and foreclosures. Unemployment in October was 10.2 percent nationally – that translates to 8 million jobs lost since December 2007. Wisconsin is fairing better with an unemployment rate of  8.4 percent – a loss of 155,000 jobs total,  and 92,000 in 2009 alone. Foreclosures are up 21 percent between 2007 and 2008 and are still climbing.

On the positive side, home values in our state have only fallen slightly – a modest 3.6 percent from their peak in the second quarter of 2007. Wisconsin is faring better than the housing recession poster child states of Arizona (down 34.8 percent), Florida (down 35.5 percent), California (down 41 percent) and Nevada (down 46.6 percent).

A slumping real estate market is not only bad for our industry, but for the entire state as well. Real estate constitutes 11 percent of the gross state product, with new construction adding another 3.4 percent. Real estate generates $8.32 billion in local property tax revenues, which constitutes 95 percent of all local government revenues. And the ripple effect is significant. Every $100 spent on housing generates another $44 in spending in other sectors of the economy.

The bottom line: Wisconsin’s economy will not recover until the state’s real estate industry recovers!

Big challenges for state government

You’ll probably remember the state budget debate from last summer as lawmakers struggled mightily to close a whopping $6.6 billion deficit. The good news is they passed a budget in July that did not raise taxes directly on real estate. Options such as tinkering with the mortgage interest deduction, increasing the real estate transfer tax, or applying the sales tax to real estate commissions or commercial leases had all been discussed in the past. They did, however, raise over $3 billion in other taxes, (including a dramatic increase in the capital gains tax) and increased boding debt significantly. They also cut spending, some of which decreased  aid to local government and thus increased pressure on local property tax increases. Worst of all, current projections indicate that the pain of recent tax increases and spending cuts only “balanced” the budget temporarily. According to the experts, the next biennial budget will start out at least $2 billion in the hole again!

Big opportunities in 2010

The challenges facing the real estate market and state government are enormous, but so too are the opportunities presented in an important election year — a year that will end with voters choosing a new governor and a new state Legislature. This will be the first wide-open (no incumbent) governor’s race since the early 1980s. These elections present us with a phenomenal opportunity — as individuals and as an organization — to impact our markets and our state. The outcome of the November 2010 elections will directly impact you, your family, your business, your community and your state.

If you are not at the table, you are on the menu

Nothing in politics just happens. Agendas and issues are determined by those who participate in, and win, elections. The candidates who win in November 2010 will be the ones deciding which programs to cut or fund, which regulations to impose or remove and which taxes to raise or reduce. And, as the old political adage states, if you’re not at the table (helping to make these decisions) you’re likely on the menu!

Active engagement and you

So what can you do to help? The answer is two things you probably have precious little of right now - time and money. Invest time in getting to know your state senator and state representative. Communicate with them on a regular basis, not just when you want something. Provide them with good counsel on matters regarding transactional, regulatory and tax issues so they can better understand the real impact of proposals before them. Help to make better laws by helping them become better lawmakers. Make sure you respond to each and every Wisconsin REALTORS® Association Call to Action. With just a few clicks of your computer mouse, you can help guide lawmakers toward making the right decisions on key issues.

Finally, invest in the REALTORS® Political Action Committee (RPAC). Your financial support for RPAC is pooled with other contributions from REALTORS® across the state and distributed to candidates — both Democrats and Republicans — who support our issues.

Our industry faces big challenges in 2010, but we are presented with even bigger opportunities. Now more than ever, we must rededicate ourselves to the notion of active engagement in politics and public policy. If we do, 2010 can truly be a happy new year!

Michael Theo is Vice President of Legal and Public Affairs for the WRA.

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