Can Obama Cure America's Housing Headache?

A series of seemingly intractable obstacles stand in the way of transforming the housing and mortgage markets to reduce government involvement. Peter Eavis asks if a second term president is exactly the force needed to overcome such obstacles.

"Mr. Obama's economic team has consistently said it wants the housing market to work without significant government support," notes Eavis. But with 92 percent of all new residential mortgages established in the latest quarter "backstopped by various government entities," it's clear the administration hasn't made much progress on that front.

One reason for the lack of movement may be that the obstacles are so intractable. "Housing policy is hard to tackle because so many people have benefited from the status quo." writes Eavis. "The entire real estate system - the banks, the agents, the home buyers - all depend on a market that provides fixed-rate, 30-year mortgages that can be easily refinanced when interest rates drop. That sort of loan is rare outside of the United States. And any effort to overhaul housing and the mortgage market could eventually reduce the amount of such mortgages in the country, angering many and creating a political firestorm."

Eavis believes a second term president may be the right force to take on these challenges, and that the housing market may be ready to deal with a government pullback. He outlines several steps that the administration could take to get the private sector more involved in the mortgage market, and allowing the government to focus on lower-income borrowers.

Full Story: For Obama, Housing Policy Presents Second-Term Headaches

Comments

building block set

NEW! Build the world you want to see

Irresistible block set for adults when placed on a coffee table or desk, and great fun for kids.
$25
Red necktie with map of Boston

For dads and grads: tie one on to celebrate your city!

Choose from over 20 styles imprinted with detailed city or transit maps.
$44.95

Essential Readings in Urban Planning

Planning on taking the AICP* Exam? Register for Planetizen's AICP * Exam Preparation Course to save $25.
Currently on backorder
T-shirt with map of Chicago

Show your city pride

Men's Ultrasoft CityFabric© tees. Six cities available.
$23.00