Montgomery homeowners shouldn't like Ike

The warm weather that usually comes with spring has only just begun to assert itself, but the race for Montgomery County Executive seems to be growing hotter by the day, as could be seen in a debate held in Silver Spring last week between candidates Ike Leggett and Steve Silverman. Despite leaving many issues still unsettled, especially issues regarding mass transit and the proposed Purple Line, both candidates left this early debate having thoroughly established their platforms when it comes to real estate and home ownership. Indeed, although the two candidates for County Executive have many of the same qualifications and even come from the same party, they could not have more widely divergent views on the housing situation in Montgomery County. Of the two, Ike Leggett, despite being a well-educated, thoughtful and intelligent man, has a platform that, if implemented, could spell out disaster for Montgomery County homeowners and real estate developers alike.

Leggett's slow growth policy includes limits on developments in Montgomery County. He accuses his opponent of "working for the developers." He promises tougher restrictions on developers, saying that he will regulate the spread of urbanization. He favors a reduced growth rate, saying that such reductions will reduce traffic. Unfortunately, such policies will only have the opposite effect.

In considering the effects of slow growth policies, Montgomery voters could look across the country, towards Santa Barbara, California. There, according to the Los Angeles Times, caps on growth rates not unlike Leggett's proposed one percent rate have been in place for years and "slow growth" polices are the norm. So are long commutes for workers who, shut out from the local housing market due to a lack of available homes, must live far from where they work. Rather than reducing sprawl, Santa Barbara's policies have simply pushed the sprawl elsewhere. Montgomery County homeowners could expect the same thing after a few years of Leggett's "balanced growth," as caps on growth force workers into neighboring counties, clogging roads and depriving the county of property tax revenue from these non-resident workers.

Perhaps the most dangerous aspect of Leggett's platform, however, is his unequivocal and complete support for a recent law that allows the county to fine mortgage lenders up to $500,000 for "high-cost home loans with exorbitant and unnecessary fees." Although the premises upon which this law was based have consumer protection in mind, this law would be a disaster for Montgomery County homeowners or potential homebuyers. Its vague wording would drive mortgage lenders, fearing unanticipated penalties, out of the county in droves. Already, reports the Washington Times, more than thirty lending firms have already curtailed or completely ended lending in Montgomery County as a result of the law.

A dearth of willing lenders would kill the value of Montgomery County homes. The economics of the problem are fairly simple: fewer lenders means less competition, which means fewer buyers would be able to secure loans. Buyers who do manage to get loans would be subject to higher costs and interest rates, due to the lack of competition, while most others would simply turn to other counties for their housing needs. In other words, the law would effectively shrink housing demand, which, in accordance with the laws of supply and demand would result in tremendous deflation of property values.

Fortunately for Montgomery County homeowners, a Federal Judge granted them a four-month stay of execution in March, according to The Washington Post, restricting the law's enforcement until a final ruling is made in early July. The fact that federal courts have had to step in should, in and of itself, show what a danger the law is to both homeowners and lenders.

Yet when asked about his stance on the law after the debate, Legget said that he "wholeheartedly supports" it, and that he favors implementing it and putting an end the judge's injunction as soon as possible.

Perhaps before heading to the polls, Montgomery County homeowners and businessmen should ask themselves: Are they willing to see enormous drops in the value of their properties. Are they willing to see their investments in their homes and real estate dwindle before their eyes? Do they want to encourage the spread of urban sprawl even further from the District, putting more cars onto the region's already-clogged arteries? If so, they should cast their ballots for Ike Leggett.