According to the Joint Center for Housing Studies of Harvard University’s 2012 State of the Nation’s Housing Report, the housing market is slowly moving towards a recovery. While the for-sale market remains depressed with slow sales and low prices, the rental market is showing significant demand. However, the continued foreclosure crisis and weak job growth will continue to be a drag on the housing market and therefore the vitality of American cities. Since the housing market has barely been discussed in the recent debates, would the presidential candidates do anything to address these problems?
While President Obama made large stabilizing investments to backup the financial system and save the auto industry, the administration’s efforts in the housing market have been less aggressive. The centerpiece of the effort to help households avoid foreclosure is the Making Homes Affordable program that provides loan modifications and refinance opportunities. The administration also is looking to turn vacant foreclosed properties into rentals. One of the challenges with all these programs is that desperate homeowners can be easy targets for scammers, thereby ending up in worse financial situations.
Governor Romney’s housing plan has four points:
- sell the 200,000 vacant foreclosed homes owned by the government,
- facilitate foreclosure alternatives for those who cannot afford to pay their mortgage,
- replace complex rules with regulation to hold banks accountable, restore a functioning marketplace and restart lending to creditworthy borrowers, and
- protect taxpayers from additional risk in the future by reforming Fannie Mae and Freddie Mac.
While Governor Romney would prefer less financial regulation, the housing plans of the two candidates are quite similar. The administration’s effort to convert vacant foreclosed properties into rentals is a way of trying to clear the inventory of government property. Also, both parties generally agree that Fannie Mae and Freddie Mac should be reformed and privatized, it is just a question of how quickly. With the election three weeks away, there is still a chance for the candidates to clarify and develop their respective housing policies. For the revival of the national economy and the continued growth of American cities, lets hope this happens.