This week, the Joint Center For Housing Studies at Harvard University released this year’s “State of the Nation’s Housing.” The report is damning for those who are trying to expand opportunities for homeownership and presents an incredible challenge for policymakers, stating, “As the cost of homeownership rises, the prospect dims for eliminating racial homeownership gaps.”
The report highlights how the lack of affordable housing supply combined with high interest rates are pricing out those on the margin, especially focusing on minorities.
The impact as highlighted in the report is stark, stating that in the past year, “millions of renters were priced out of homeownership.”
Consider this: When looking at new units being built for housing, from single-family detached, condo, 2-4, 5-20, 20+, and manufactured housing, the new supply of housing being created today is a shadow of years past. In fact, the current state of new units being created has never been this low looking all the way back to the early 1930s.
This is truly disgraceful for a nation that recognizes the value of homeownership. So far we are learning that talk is cheap, but the real work is much harder.
Vice President Kamala Harris gave a speech in Maryland in February about the importance of homeownership in which she shared her own story about growing up. “For most of my childhood, our family rented. And then there was this one afternoon where my mother — our mother — called my sister Maya and me in. We were in high school at the time. And she called us into the kitchen, and she showed us this photograph. And it was a picture of a one-story, dark grey house with a shingled roof and a beautiful lawn. And mommy, which is what we called her, was telling us that after her years of saving, she was ready to become a homeowner,” said the vice president.
The opportunity to live in their own home was a life-changing event.
The time for speech-making and haphazard pricing policies from the government lending sources needs to stop. This problem is so severe, and getting worse, that it demands presidential focus, policy leadership, and agency coordination if we are ever really going to change this retreat from opportunity that we are seeing today.
There is a desperate need to provide executive leadership and focus on housing in America today and time is running out. But we have a model for this. In 2009, when I was in the Obama administration, the “Housing Team” was formed. It consisted of “principals” and “deputies.”
The principals were all cabinet-level direct reports to the president. They included people like Larry Summers (NEC Director), Shaun Donovan (HUD Secretary), Tim Geithner (Treasury Secretary), and Austan Goolsbee (CEA), and so many others. And meetings would often be complemented with the addition of the OMB director, the chief of staff to the president, and a variety of senior staff members.
The deputies reported to the Principals and included the assistant secretaries of the respective agencies that were relevant at the time and other senior staff. I was part of this group, but it included many key government leaders today, including Michael Barr, now vice chair of the Federal Reserve for supervision, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, Jim Parrott of the Urban Institute, and so many others.
The deputies met several times per week, especially a core group of us, to discuss efforts to resolve the housing crisis that threatened the nation at that time. I remember times when a few of us would get a call from Secretary Geithner’s office that he wanted to meet. We would drop whatever we were doing and head to Treasury to discuss the current concern or issue.
Preparation of policy to determine what and how to present recommendations to the president took a great deal of time and focus. And all of this was about housing and mortgage policy. And we executed — we implemented.
My point? In the Obama administration, housing issues were a top executive priority all the way up to the president of the United States. Issues were not decided upon randomly or independently. We worked hard to decide on the best way to address housing and mortgage challenges in a macro, multi-agency environment.
Rather than what appears to be a somewhat arbitrary and likely less effective set of policy moves as we are seeing today this administration should provide the level of focus in a similar way that the housing team operated during the Obama administration.
This year’s study from Harvard is an almost indictment to the state of housing policy and its effectiveness. And yet the problems facing this nation are clear and include:
1. Setting the priority for this nation with urgency that housing is a bedrock for family security and inter-generational wealth-building in this nation that has been eroding with the wealth gap only widening and with the low housing supply and lack of implementable policy ideas to move the dial.
2. The need to rebuild neighborhoods to support new homeownership opportunities, particularly in urban centers such as those that exist in the “Rust Belt” inner cities.
3. Meaningful solutions to improve affordability with creative financing vehicles to include concepts such as equity sharing, scalable down payment assistance, and interest rate subsidies (buy-downs) to make payments affordable.
4. Making affordable housing supply a priority and transitioning from talking points in speeches to executable plans that actually build units at a record pace.
5. A national focus on financial literacy training for young people, especially those living in underserved communities to prepare them for a future of homeownership.
This lack of effectiveness of policy today is not intentional. But I strongly recommend that this administration embrace some key business leaders to join them in this effort. While we have some great policy leaders who have hovered inside the beltway of Washington D.C. for decades recommending housing policy to political leadership, it was always clear to me during my time working in D.C. that having an administration that also recruited those who understood the industry and how it operated versus only having those who had thoughtful ideas about creating change for consumers was critically important.
Between skill sets and executive focus from the top, this administration is ignoring an ever-widening dearth of opportunity for those that do not have access to homeownership today. Focus, priority, skill sets: the administration needs to show that it is serious about housing – the challenges today are as large and looming as this nation has seen in decades. This is a real crisis and the JCHS at Harvard just made this crystal clear.
David Stevens has held various positions in real estate finance, including serving as senior vice president of single family at Freddie Mac, executive vice president at Wells Fargo Home Mortgage, assistant secretary of Housing and FHA Commissioner, and CEO of the Mortgage Bankers Association.
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To contact the author of this story:
Dave Stevens at [email protected]
To contact the editor responsible for this story:
Sarah Wheeler at [email protected]