“We are in the midst of the worst rental affordability crisis that this country has known,” said Shaun Donovan, U.S. Secretary of Housing and Urban Development.
There are now 43 million renter households, or 35 percent of all U.S. households, the highest rate in more than a decade for all age groups, according to Harvard’s Joint Center for Housing Studies. That’s 4 million more renters today than there were in 2007. For those aged 25 to 54, rental rates are the highest since the center began record keeping in the early 1970s.
Wait a minute. The Clinton Administration wanted to make homeownership more affordable for lower-income Americans and those with a poor credit history. Take a look at the National Homeownership Strategy: Partners in the American Dream from the Department of Housing and Urban Development under Clinton. nhsdream2
“Our nation’s greatest promise has always been the chance to build a better life. For millions of America’s working families throughout our history, owning a home has come to symbolize the realization of the American Dream. Yet sadly, in the 1980s, it became much harder for many young families to buy their first home, and our national homeownership rate declined for the first time in forty-six years. Our Administration is determined to reverse this trend, and we are committed to ensuring that working families can once again discover the joys of owning a home.”
And working families once again discovered foreclosure and a severe decline in the homeownership rate, thanks in part to the massive expansion of credit during the last decade and the efforts of HUD to push home ownership. We also got a housing bubble that burst.
So now, Shaun Donovan (and his partner in crime Harvard Joint Center for Housing Studies) are now saying that RENTAL rates are too high and there is an affordability crisis. The exact same rhetoric of the Clinton Administration and his HUD Secretaries Henry Cisneros (now with the Bipartisan Policy Center) and Andrew Cuomo (now Governor of New York) except for OWNING a home.
Get it? Housing was too expensive, so HUD stepped in (along with Congress) to make homeownership “affordable” through low (or zero) down payments and “streamlined” underwriting. We then almost blew up the banking system along with Fannie Mae and Freddie Mac. But now Donovan along with the usual line-up of suspects want to make rental housing “affordable.”
Anytime the government throws its corpulent mass at a “problem,” it will always end up in horrible market distortions … like the great leap forward in home ownership.
This brings me to housing finance “reform” in Congress. As far as I can see, Corker-Warner does nothing to reign in the affordable housing advocates and the government guarantee is still there. They are even being hounded about the 10% capital meme that groups want reduced to 5% (or 0%).
The public-private partnership between Fannie Mae, Freddie Mac and the Federal government worked wonders in good times, but caused taxpayers an enormous bailout in bad times. I see nothing in Corker-Warner that is different.
So, the horrible boom/bust mechanism remains in place where the Federal government can distort markets at will by saying “Home ownership is not affordable! Wait. Renting is not affordable! Wait! …)
And we still have declining real median household income since 2000, despite the massive growth of The Fed’s Balance Sheet.
It’s a vicious cycle that few in Congress want to end, particularly in the Senate.
And with The Fed artificially supporting mortgage rates through agency MBS purchases, the entire housing system is jury rigged with Scotch tape and Elmer’s Glue All.