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CoreLogic U.S. Housing Policy - Don’t Forget Housing in the Race for the White House

Faith Schwartz    |    Videos

 

Presidential prospects from both parties haven’t been shy about taking positions on a wide range of issues: everything from immigration to healthcare and gun control to climate change. One issue that has been noticeably missing from the debate, at least so far, is housing.

US Home Ownership Rate

US Home Ownership Rate

And that seems strange to me. Because housing—and the broader issue of affordable shelter—are critical elements in the national discussion over… the future of the middle class… the sustainability of the American Dream of homeownership… and even the appropriate role of government.

From a spin-doctor’s perspective, housing can provide plenty of fodder for both sides in the coming campaign.

Homeownership, for example, is at its lowest level in decades. Meanwhile, observers like the Joint Center for Housing Studies at Harvard and the Urban Institute, are warning that the country will soon face a rental-housing crisis.

Between now and 2030, nearly 60 percent of all new household formations will be renters.  And the number of severely rent-burdened households will grow to 13 million in the next 10 years, according to the joint center for housing.. The fastest growing cohort will be older Americans in the 67-to-74-year groups and the age 75 and older group which will be up by 42 percent and 39 percent, respectively.  We do have an aging population over the next 15 years.

The decline in homeownership and the prospect of unaffordable shelter disproportionally hurt low-income families, minorities and, increasingly, elderly populations. All of these are important issues for any campaign to discuss.

One argument can be made that existing housing policies have failed in that that not everyone is ready to be a homeowner and would point to the Great Recession, as the price our country paid to learn that lesson.

Share of First Lien Originations

Share of First Lien Originations

From a purely economic standpoint, the housing recovery is moving forward with strong liquidity and newly developed policies that allow for safe and sound loans being created. However, the Government remains dominant in housing by use of its’ guarantee.Alternatively opponents of big government could make hay with the delays and confusion surrounding new regulations due to Dodd Frank, such as new disclosures, compensation rules and servicing rules that have been implemented.… particularly if these issues continue to have some confusion into the spring home-buying season.

To paraphrase Ricky Ricardo: Both parties “have some ‘splainin’ to do” when it comes to the issue of Housing and GSE reform. Everyone is on record as being for it, FHA, VA, and USDA rural, the U.S. taxpayer is still on the hook for more than 70 percent of all mortgage originations.

It seems to me that it’s fair to ask what each candidate intends to do about this and how quickly it will be addressed in a new administration? Should the government continue to play a “majority sized” role in housing finance? Some would argue yes. But if not, what’s the plan for bringing private capital back into the housing finance market? We see some of this happening through the credit risk transfers from the GSE books of business being sold to credit investors.

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