While Barack Obama and John McCain appear anxious to move into the White House, neither has much to say about housing. Yet rarely a day goes by that the headlines don't mention the current housing crisis and its threat to the financial markets and the economy. This has led to a strange disconnect between the presidential campaigns and national reality.
Sub-prime lending and the ensuing foreclosures are being blamed for the crisis, but the problems and blame go much deeper. The fact is, our nation does not have a housing plan, and has not had one for years.
The lack of a plan can be seen in the routine underfunding of the U.S. Department of Housing and Urban Development (HUD). The 2008 HUD budget does not have enough money to maintain contracts on its current stock of affordable housing. It is $2 billion short and needs to borrow money, which only pushes the problem onto the next administration.
Everyone now knows that too much deregulation and low interest rates contributed to a speculative housing bubble, but what's not being mentioned is that it also widened the mismatch between the nation's housing stock and the public's needs. For example, it caused overproduction of unaffordable condominiums, with the conversion of rental housing into condos displacing thousands of renters, forcing them from their homes. It also pushed up property taxes, pressuring existing homeowners.
Now today, there is a glut of vacant condos even while many families are doubling up or kids are moving back in with their parents. Unsurprisingly, speculative markets turned out to be a lousy way to provide housing security for millions of Americans.
A study by the Joint Center for Housing Studies showed that housing is becoming increasingly unaffordable. In 2005, 37.3 million households paid more than 30 percent of their income to housing, and 17 million households paid more than 50 percent. Many people worried about their housing are working full time, one in five are seniors. Poor people fear they will end up homeless. On any given night there are at least three-quarters of a million people who are homeless, many of them mentally at risk, about half of them children.
Housing is far too important to the health and well-being of the nation to be left exclusively to the whims of "the market." Government must play an appropriate role in ensuring that everyone has safe and affordable housing. Presidential candidates asking for our vote should have a plan for how their administration would accomplish that. Yet none of the three presidential candidates have an issue position on their campaign websites regarding housing policy.
What would a sound housing policy look like? Here are some of the crucial elements.
First, more rental housing is needed. Rental housing provides homes to many of this nation's low- and moderate-income households, yet currently little new rental housing is being built. The private sector has focused almost exclusively on the home buyer market, and government activity mostly is producing replacement housing for what they have torn down. Federal, state and local governments should partner with the private sector to increase incentives for building rental housing that is affordable.
Second, affordable housing can be increased by expanding the nonprofit housing sector. Nonprofit associations, which develop and manage affordable housing as a private, social-oriented business, have been successful in Europe but are barely a blip here. In Europe, it is not uncommon for a nonprofit to manage more than 20,000 units, substantially more than most comparable entities in the U.S. In London, 25 to 35% of new units are required to be "affordable." All of these help keep the cost of housing down.
Third, any new housing policies must include increased oversight of lending practices. Limits must be placed on the credit industry to prevent exploitative practices. Far too many people have been hurt by a wildly unregulated mortgage market.
Our nation needs a serious and sustained debate about housing policy, yet the presidential candidates have been deafeningly silent. Promoting one's candidacy as an agent of hope and change is all well and good, but the devil is in the details. The presidential campaign offers a perfect opportunity to put forward a multifaceted national housing plan to counter the tragically flawed housing policy that has left this nation's economy and residents at risk.