WisBusiness: Real estate pros lukewarm to Walker's HSA relief proposal; some disappointed by high-speed rail loss
By Kay Nolan
Wisconsin's real estate trade association had vigorously backed Scott Walker's bid for governor, but individual real estate professionals appear underwhelmed by Walker's proposed tax break on health savings accounts and divided over his decision to kill high speed rail
Although real estate professionals, who are largely self-employed, say any break on health insurance costs is a step in the right direction, they say job growth and mortgage loan incentives would be more likely to rescue their struggling industry.
"To me, the biggest issue affecting our industry right now is jobs," said Peter M. Stefaniak, co-owner of Milwaukee-based Stefaniak Group and a former president of the Milwaukee Board of Realtors. "People are looking, but afraid to pull the trigger in an otherwise perfect time to buy -- rates are incredible, there's lots of inventory, prices are low -- because they're not sure they're going to have a job tomorrow when they wake up."
Walker spoke recently to about 200 real estate professionals gathered at a Wisconsin Realtors Association conference in Waukesha. He vowed to push for a repeal of Wisconsin's state tax on health savings accounts, which allow individuals with high-deductible health care plans to set aside money for medical costs. Federal income tax is not charged on that money.
But Stefaniak said, "To be honest, from an agent's point of view, if that agent is having a down year, they're not going to be able to put money away for anything anyway."
John P. Horning, executive vice president at Shorewest Realtors and chairman of the Wisconsin Realtors Association, introduced Walker at the conference as having "had the full support of Realtors during his eight years as Milwaukee county executive."
"We helped put him in office," Horning said, as attendees gave Walker a standing ovation.
Horning agrees that reducing health care costs could help real estate practitioners.
"Realtors are independent contractors and are responsible for their own health insurance," Horning said. "Some have been forced to leave the field because they have been unable to afford or obtain health insurance, particularly if they have pre-existing conditions."
According to the National Association of Realtors' Web site, more than one out of every four real estate agents has no health insurance and only 17 percent of real estate firms offer health care coverage for independent contractors, who are the largest segment of real estate agents.
But longtime real estate broker Ray Kuehl of Waunakee says he and others are weary -- and wary -- of temporary or poorly thought-out fixes. Kuehl says he's turned off by Walker's haste to make decisions without seeking consensus or compromise, and wishes all politicians considered the long-term consequences of their actions on businesses.
For example, real estate professionals wish lawmakers would revive last year's incentives for first-time homebuyers, and say the pendulum has swung too far from the lenient mortgage approvals of a few years ago to making it far too difficult to obtain financing.
Residents and small business owners "who we think are very qualified" are being denied loans, Kuehl said, "They only go back two years on taxes, when all of us, especially small businesses, have been hit hard and might not show a profit," he said.
Horning said another key policy issue for the real estate industry is maintaining tax deductions on mortgage interest.
"There's talk of capping the deduction based on your income, and of ending the deduction for second homes and for home equity loans," he said. Such a move would hurt Wisconsin, where there are a significant number of second homes in vacation areas, such as the Wisconsin Dells, Lake Geneva and northern counties, he said.
Horning said he hopes the Walker administration will add staff to the state Department of Regulation and Licensing. "Being understaffed, it can take up to a year to get a real estate form approved," said Horning.
But Walker said at a recent Milwaukee Press Club luncheon that he would permanently eliminate all vacant state jobs and might cut further positions.
Stefaniak said the real estate industry supports Walker's overall position on holding down taxes. But not everyone is happy that federal rail funding was redirected to other states after Walker vowed to kill a proposed high-speed line between Milwaukee and Madison that would eventually link with the Twin Cities.
"I wish we were a more progressive state, because I've been to other cities where this has worked," said Stefaniak.
"I'd liked to have seen high speed rail; it would have been a good thing," said Richard E. Kuula, whose real estate business in Mikana serves many Minnesotans seeking vacation properties in northwestern Wisconsin. "When Minnesota coughs, we hurt," said Kuula.
"I, myself, am disappointed. I think it would have helped development," said Mike Dale, who manages several Eau Claire-area offices of Edina Realty, which has 65 real estate offices throughout Minnesota, North Dakota and Wisconsin. "I'm concerned about energy costs as well," Dale said. "While traveling to the conference, I could see the traffic on I-94 that it would have relieved."
Chris Thomas, co-owner with his wife, Lynn, of Right on Target Real Estate in Sun Prairie, said he's inclined to agree with Walker in nixing the high-speed train. Thomas has seen real estate developments launched with fanfare and government assistance, only to lay vacant or falter financially.
"I find it hard to believe that (high speed rail) would impact development that much," said Thomas. Still, he was surprised by Walker's hasty decision, and said he would have liked to learn more about the proposed train, such as its expected ridership.
Thomas says Walker got elected because people want change that will boost business. "It's definitely tougher for a lot of agents out there," he said. "I've heard there's a number of agents who are not going to renew their licenses or be able to pay their dues for this next year,"
Michael Jakus of Shorewest Realtors' Lake Country Office in Oconomowoc is optimistic that things are looking up in Wisconsin.
"I had a little bit better year," he said, adding that his office overall had improved sales in October and November.
But Stefaniak said, "I think Walker has good ideas. He understands, I think, where we need to go to get this turned around. But from a real estate standpoint, I don't know if I've hit bottom yet, and I guess, to me, real estate tends to drive a lot of other aspects of our economy."