Housing Expert Forum: How can housing policy be responsive to today’s urgent needs and simultaneously address long-term trends?
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Welcome to the BPC Housing Commission expert forum! This forum is intended to foster interactive and substantive discussion about pressing housing issues. Each month contributors from different parts of the housing sector will be invited to respond to a discussion topic.
Have a pressing question you’d like us to consider? Please leave it in the comments section. We encourage you and our expert bloggers to add comments, contributing to the national dialogue on solutions for the future of the housing sector.
Expert bloggers are not members of the BPC Housing Commission. Any views expressed on this forum do not necessarily represent the views of the Housing Commission, its Co-Chairs, or the Bipartisan Policy Center.
How can housing policy be responsive to today’s urgent needs (e.g., foreclosures, a sluggish housing market, affordability, etc.) and simultaneously address long-term trends (e.g., an aging population, growth of younger households)?
Reduce Uncertainty, Preserve Tax Incentives
There is little doubt that we have not yet seen the bottom of the housing market. The private sector is already working to correct the market imbalances and has the ability to do much more. Unfortunately, the constantly changing policy landscape creates uncertainty that impedes progress in solving the housing crisis. The federal government needs to stop experimenting with new programs or changing programs that have actually worked well and outline a decisive plan for the return of private capital to replace the dominant role government has played in housing finance. No plan will be perfect or entirely fair. But we must decide.
Read the full post here.
Striking a Balance to Boost the Market
By Kevin Igoe
Housing policy over the last several decades has been far too intransigent and slow to react to America’s changing demographics. Programs, once established, seem to last forever, even if at a reduced level. Well-intentioned policymakers inherit existing programs and even when the policymaker is prone to change, the change amounts to nibbling around the edges. Programs find their way into a governmental budget, be it federal, state or local, because there is a constituency that wants that program. Real change is very difficult to achieve.
Read the full post here.
Demand subsidies are ineffective without increased flexibility in supply
Our housing market currently suffers from a combination of weak demand and excess supply. The first thing our federal housing policies can do is to stop adding to that problem. Programs, such as the Neighborhood Stabilization Fund, that encourage increased supply in already glutted markets should be discontinued, or at least have those recourses moved elsewhere. Credit regulation should also be mindful of restrictions that reduce the supply of credit, which reduces the demand for housing. To some extent the current problems are the opposite of our long-run problems. Today’s excess supply will eventually be absorbed, with or without government intervention. Demand will rebound, with or without government intervention.
Read the full post here.
A Unique Opportunity to Think Long-Term
By Bill Kelly
Treating this as a question about where the commission should devote its energy and resources, I recommend that it focus not on the immediate issues but on longer term issues, including demographic drivers and their consequences for housing demand and public support. At the same time, the commission’s bipartisan composition creates a rare opportunity not just to study the very long-term, but to develop recommendations on which Congress, the administration, and the other key players can begin to act in the next few years. Many aspects of our current system are bent or broken and this is a unique opportunity to design solutions.
Read the full post here.
“Getting the bones right so the extremities can work more effectively”
By Conrad Egan
Best to leave the current immediate issues to those so actively engaged in today’s maelstrom.
Recommend focusing on the longer term challenges of the future, as BPC’s demographic paper and others, including CRA/GMU, have well described about the homes and the renter/buyers/needers of the future?smaller, closer, more affordable and supportable.
Read the full post here.
Rebuilding Confidence, Restoring Sustainability
Today’s market requires a rebuilding of confidence in the housing sector. Reasonable down payment standards for qualified prepared homebuyers is one example of a tool that can help reinvigorate the sector in these challenging times. Continued commitment to the low income housing tax credit is equally essential to provide much needed multifamily housing, and stimulate jobs and investment.
Read the full post here.
Responsiveness Follows from Ecosystemic Robustness
The collapse of housing prices for subprime-financed owned homes represents a massive loss of value all along that value chain: homeowner; originator; mortgage-holding bank; securitizer; and behind them all, the federal government, which has become the banking system’s unwilling backstop. All of these parties may have negative equity, a situation that will freeze them into economic immobility. To get them out of negative equity, everything involved has to be written down: home price, owner’s equity, value of debt, value of security. This doesn’t automatically mean rewriting principal balances, but it does mean forcing debt compression, either through foreclosure, workout, or otherwise.
Read the full post here.
Three Paradigm Shifts for the Future
To better address both present and future needs, the field vitally needs stronger systems for building knowledge about what works and what doesn’t under different circumstances. We need to shift to a culture where we constantly evaluate the effectiveness of current practice, identify future needs more clearly and explicitly, and share information with one another about how to design and refine policies to meet both current and future needs. The results would be used both to inform local practice and to identify policy changes needed at the federal level to strengthen programs and allow us to serve more people at lower per-unit costs.
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Housing as a Process, Not a Product
If housing policy is to address the rapidly growing need for shelter and if we are going to attempt to respond to long-term demographic and economic trends, we need to alter the way we think about housing as a nation. Housing is not a product. It’s a process, and housing at all economic levels has to be set in the context of community, involving many people and organizations. If we are to provide affordable housing for all, the public, private and social sectors have to come together.
Read the full post here.
Focus on more efficient foreclosure process, GSE reform
There are few benefits to delaying GSE reform. In 2008 and 2009, one could argue that the GSEs were making loans the private sector could not or would not extend. But making such a case is far harder now. In the past, Fannie Mae and Freddie Mac insured credit risk when private investors were unwilling. But now, the net effect of policies at Fannie Mae and Freddie Mac that force lenders to buy back defaulted loans is to push a large portion of credit risk into onto lenders and, in effect, into the private sector. Freddie Mac and Fannie Mae also no longer lead the market in terms of underwriting efficiency. In the 1980s and 1990s, Fannie Mae and Freddie Mac led pioneered automated underwriting and led the industry. Now the fact that portfolio lenders like Pentagon Federal Credit Union don’t need to deal with GSE underwriting is a selling point.
Read the full post here.
By Kent Watkins
Why not have the commissioners ask the tough questions e.g., Should there be a constitutional amendment guaranteeing shelter? If a scenario of 50% renters to 50% homeowners is happening in this country, what would be the ramifications? What if we did away with the Housing Act of 1937? Or HUD? What is a sustainable model for collecting and re-distributing funds? What role and paradigms will technology play in the next 50 years in shaping the urban area? How do you harness the billions of dollars spent for urban research and development in the entire federal government? What are some best practices for integrated land use/transport systems?
Read the full post here.
Past Forums
February 2011 Housing Expert Forum: What are some of the key characteristics of a healthy housing system? And how can the success of these features be measured?
January 2011 Housing Expert Forum: What should the federal government do to address the inventory of foreclosed properties?
December 2011 Housing Expert Forum: What are the most pressing issues in housing policy today?
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