Five Simple Ways GSE Reform Can Narrow the Homeownership Gap
By Karen Shaw Petrou
With house prices reaching new highs each month, it is easy to come to the conclusion that U.S. residential housing has fully recovered since the depth of the financial crisis. However, the housing recovery is as unequal as the rest of U.S. income and wealth distribution. When it comes to housing, the gap between those at the upper ends of the wealth ladder and lower-income Americans has widened markedly since the financial crisis, despite the trillions of direct and indirect subsidies that taxpayers provide to the housing finance system. Homeownership, of course, isn’t always the right decision for households at the very bottom of the income spectrum, but it’s still the best path to long-term wealth accumulation for younger and low-to-moderate-income Americans. With Congress and the administration set to reconsider how Fannie Mae, Freddie Mac, the Federal Housing Administration and the Federal Home Loan banks support residential finance, now is the time to assess why a market in which 90% of mortgages are backed by the U.S. taxpayer fails to meet the housing market’s most urgent needs.