In the wake of the recession and the housing bust, some argue that signs are pointing to a new generation of renters, as many consumers either can’t qualify for a mortgage or view buying a home as too risky. Rental markets are heating up, while the nation’s homeownership rate is at its lowest level in 15 years.
At the same time, persistently tight lending standards for homebuilders and homebuyers, ongoing threats to vital housing tax incentives and uncertainty regarding the future of the housing finance system are hampering a housing recovery.
June is National Homeownership Month, and with a housing market that’s still struggling to recover, policymakers must act to ensure homeownership remains a national priority.
While buying is clearly not for everyone, housing and homeownership still matter greatly. It is important to individuals, families, our communities and our economy, giving plenty of good reasons why policymakers should take concrete steps to get housing back on track.
For starters, Congress should pass legislation to restore the flow of credit for new housing production. A lack of acquisition, development, and construction (AD&C) financing for new homes is dragging down the housing industry and preventing construction of new homes in markets that need and want them. Bills introduced in the U.S. House and Senate would remove barriers to lending while preserving the ability of regulators to assure the safety and the soundness of the financial institutions they oversee. The bills, H.R. 1755 and S. 2078, will help resolve the ongoing credit crunch, create jobs and keep the economy moving forward.
As debate on tax reform continues, federal policymakers must preserve current housing tax incentives, including the mortgage interest deduction and Low Income Housing Tax Credit. Eliminating or reducing these tax incentives for housing would only send more shockwaves through the economy and should not be considered.
Congress should also reform housing government-sponsored enterprises Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The current housing finance system should be restructured to ensure a reliable and adequate flow of affordable housing credit in all economic and financial conditions.
With these actions, Congress can help get housing back on track and our nation move toward making homeownership a national priority.
Homeownership and access to affordable housing must be a local priority as well. It is equally important that state and local governments avoid regulations and fees that are overly burdensome or that keep viable projects from moving forward.
One important reason to advance home ownership is that housing is a major driver of the economy. A substantial 15 percent of the U.S. economy relies on housing. A healthy housing industry is not only good news for those who happen to build and sell houses for a living but good news for our entire region and every employment sector. A home is where a job goes for the evening.
A recent study from the National Association of Home Builders found that in King and Snohomish counties, constructing 100 new homes creates more than 300 full-time jobs, $28.3 million in wages and business income and $4.3 million in taxes and other revenue for local governments. At the same time, when the homebuilding market slows, the economic impact is widespread. As the housing recession demonstrated, local and state governments are forced to either reduce public services or increase tax revenues (or both) when they lose the taxes and fees generated by new home construction.
Another important reason to support homeownership is that people still value its intrinsic benefits. Owning your home not only provides a place to raise a family but helps create a stronger community and a sense of security. For most Americans, their homes remain the biggest investment they will ever make. But it is more than just an investment. Historically, homeownership offers stability, pride, a sense of accomplishment and peace of mind.
Survey results back this proposition. A recent poll of Washington State University students, conducted by Glenn Crellin, research director at the University of Washington’s Runstad Center for Real Estate Studies, found that 48 percent of millennial generation (Generation Y) students want to buy a home in the next three to five years. These answers confirm that the younger generation is still interested in owning homes, contrary to pundits predicting a permanent shift to renting.
A survey released earlier this year by the magazine Better Homes and Gardens found that eight in 10 respondents said homeownership is still a good investment and an important part of achieving the American dream. Taken together, the findings demonstrate that consumer views of homeownership remain strong, despite continuing economic and housing market uncertainty.
As policymakers debate the housing finance and budget issues that will impact job creation and future growth, they must understand the important role that housing plays in our economy and in our communities. They must ensure that homeownership remains attainable and that access to safe, decent and affordable housing remains a priority.
Home ownership is still the foundation of the American dream and the nation’s economy.
Samuel L. Anderson is the executive officer of the Master Builders Association of King and Snohomish Counties.
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