This year’s Advocacy Impact Day came at another watershed moment for the U.S. government during the global pandemic. Just as the American Congress was negotiating final terms of the $1.9 trillion COVID relief package, IREM members were learning details of identifying your legislators, scheduling and conducting successful meetings, what to expect, how to prepare, and following up. Since protocol continues to change with COVID-19, it’s important for members to know how to have these conversations today.
Setting the stage for the current economic environment, a look into the future, and what to watch for as the economy recovers, Todd Buchholz joined the event to deliver his insight.
Economist Todd Buchholz
Economist Todd Buchholz, who served as director of economic policy under George H.W. Bush, joined the event to talk about what to expect from the economy this year. He reminded the audience that early on, 2020 was going to be a great year! Markets were up, unemployment was low, and we anticipated only more growth and economic expansion. Until, what he calls The Great Cessation, when we were all urged to stay home. We did, and at first we also stopped buying, bringing all that momentum to a halt.
Nonetheless, history has shown it’s easier for an economy to recover from a cessation than from a recession. Markets heal quickly from outbreaks of disease. In his view, there are three critical levers to watch and gauge the pace of recovery – what he calls ROT: Rates, oil, and trade. However, if the Federal Reserve Bank loosens its grip on low interest rates and allows rates to rise, inflation could significantly damage the economy, especially in its current fragile state. Oil and trade have long been key indicators of economic activity, and so, watching developments in these areas can forecast growth or a downturn.
In real estate, Buchholz believes 80% of office space will come back, when workers begin to return to the office. He also believes retail will survive, including brick and mortar. In fact, opening a brick-and-mortar shop has been shown to increase (their?) online sales by 29% in the store’s region. But the retail space needs to be interesting – shoppers need to experience the product, much like Lush stores encourage shoppers to touch, smell, feel and use their products as they browse.
And the good news for IREM members reaching out to legislators? President Biden named Marty Walsh as the U.S. Secretary of Labor. Walsh has a background in real estate, joining Laborers’ Union Local 223 when he was 21, and named head of the Boston Building Trades in 2011. His position in the current administration could have a positive impact on legislative decisions that support the real estate industry, and our profession.
Epidemiologist Dr. Thomas Songer
Do you know that 30% of people infected with the COVID-19 virus never show symptoms? Dr. Songer, of the University of Pittsburgh’s School of Health and Rehabilitation Sciences, shared highlights of what medical professionals have learned about the virus. While a year of lockdown, shutdowns, mask-wearing and social distancing seems like a long time, because it really is, a year of learning the behavior of a novel coronavirus isn’t much time at all.
But, we’ve learned. We learned about the transmission variables, the importance of indoor ventilation, the vast differences between indoor and outdoor environments, and the fact that masks work! For property managers, the effectiveness of HEPA filters has been validated, and while expensive, they’ve also been proven to minimize virus transmission. Since Songer believes the virus will circulate among the population for years, investments in clean air filters and improved ventilation systems are worth it, even with vaccines becoming increasingly available. While vaccines prevent severe illness and death, it’s too soon to assess the differences in virus transmission pre- and post-vaccine.
Prepare to meet with legislators
There’s so much to talk about. Some of the issues affecting the real estate industry right now are:
The eviction moratorium. This will end, and it could end badly for real estate owners, investors, property managers, tenants, and residents without government assistance.
Housing assistance. The gap is widening between those who can afford safe and decent housing, and those who cannot. How can that gap be narrowed?
The SAFE Banking Act. With cannabis use for medical or recreational purposes legal in most states, it’s unsafe to operate a largely cash-only business. The SAFE Banking Act can diminish security concerns for these businesses, building owners, and property managers.
1031 Exchanges. IRS code Section 1031 has been in use for over 100 years. And it’s not intended to benefit wealthy individuals seeking a tax reduction – everyone benefits from this IRS tax code whenever you sell a house to buy another one or engage in any allowed like/kind exchange.
Final thoughts
Visit the Advocacy Impact Day page at irem.org for a recording of this event. Scroll down and you’ll also find IREM’s Legislator Lookup Tool, steps to schedule meetings with legislators, letter templates, and detailed information on conducting effective virtual meetings. Ultimately, it’s important to recognize your legislators want to get to know you, too. So, get to know them, relax, and have fun with it.