Above, J.B. Goodwin, left, CEO of JBGoodwin REALTORS® and Wyoming Junior Senator Cynthia Lummis at RISMedia’s CEO & Leadership Exchange on Wednesday, Sept. 6. (Photo by AJ Canaria)
“You’re not just hearing from a politician, you’re hearing from someone who knows our business, understands it and plays in that game every day.”
That was how J.B. Goodwin, himself a titan of the real estate industry, brought Wyoming’s Junior Senator Cynthia Lummis on stage at RISMedia’s CEO & Leadership Exchange last week. The presence of the ranking Republican on the Senate banking subcommittee on housing, transportation and community development, who comes from a family of ranchers and developers, was a golden opportunity for this storied audience of housing professionals to get an inside look at federal policymaking that will shape the industry—or a chance for a sitting U.S. Senator to better understand the industry she regulates.
In the end it was both, as Lummis and Goodwin dove into interest rates, government regulation and affordability—in both present and future tenses—starting an open dialogue on these issues that more often take place behind closed doors.
“We have created a situation where interest rates are extremely high and people who have adjusted to interest rates in the three, four and under five percent range are not going to let go of those fabulous interest rates,” Lummis said. “The greatest opportunity is in new housing.”
Policy, particularly federal policy, remains somewhat disconnected from the everyday practice of real estate, which is largely dictated by decisions made at the local and state level. Despite the impressive array of CEOs and major real estate players in the audience, the focus of Lummis’ talk was not gauging or rallying support around one federal initiative or another.
Rather, the senator sought to elucidate a high-level perspective on major housing issues from the perspective of an elected official, reflecting on issues that brokers are currently grappling with in the context of governance—always an important topic, but especially timely given how monetary policy has impacted housing markets over the last couple years.
“There’s so much low-hanging fruit in overspending in the United States economy that we could do that. And so if we really put our shoulders to it and our minds to it, we could pass some (tax) incentives and offset them with targeted spending reductions,” she said.
Regulation—not at the federal level, but from state and local governments—has long been a target of real estate business leaders. Lummis did not dispute this, saying that local is the place to start getting involved in policy, even if the end goal is to affect federal regulations.
“The incubators of innovation are in the states. And so I strongly encourage you to use your states as your main approach to your activism,” she urged.
Regulation is particularly important in the realm of new home builds, which have surged in response to high buyer demand and a dearth of existing inventory. While there have been various estimates by different advocacy groups, Lummis claimed that the average regulatory cost of a new build is around $94,000.
While Lummis has a personal and political stake in encouraging new builds—Wyoming has seen a 41% surge in new construction since the pandemic, and she said she has family members currently shopping build-ready lots—it is hard to argue that regulation isn’t contributing to affordability challenges.
While the federal government can do relatively little about that, Lummis further argued that federal spending “transcends all the other things we’re talking about,” arguing that broad cuts combined with tax incentives would benefit housing.
Leading real estate economists at the event said it was unclear just how much recent spending sprees and federal stimulus have contributed to the current environment in housing—though no one has disputed that markets are currently absorbing the aftereffects of unprecedented COVID fiscal pivots.
Broadly, Lummis said she shared the frustration of many real estate professionals in terms of how the federal government currently functions, speaking fondly of her time in the state legislature back in Wyoming where politicians found success in addressing “some really gnarly issues.”
As the federal government faces another showdown over spending, with Lummis and other fiscal conservatives threatening a shutdown, the senator reemphasized to the audience of several hundred business owners and leaders—who hailed from every corner of the United States—that they have the power to enact change from the ground up.
“Thank you for being activists…your expertise on the ground and your access to market conditions is something your local governments need to have,” she said. “The federal government likes to replicate success stories that occur in the states. And you’re so admirably positioned to provide your states with ideas that they can more nimbly implemented than Congress can.”
