As Congress debates solutions to the mortgage meltdown and ever more homeowners find themselves facing foreclosure, a new report suggests that policymakers and industry regulators need to move beyond what some are calling a “one-size-fits-all” approach to the current housing and mortgage messes. A new report released late Thursday by the Center for Economic Policy and Research and the National Low Income Housing Coalition found that the ratio of homeownership to rental costs varies substantially from market to market, and that in many markets, homeownership remains a costly — and risky — proposition. Which means that foreclosures are hitting renters, too.

“This is not just a homeownership crisis.” said Danilo Pelletiere, NLIHC research director and a co-author of the report. “Data shows that nearly 40 percent of foreclosures affect rental properties and in many areas, homeownership markets remain highly uncertain. Any policy to address this crisis must recognize the rental market as part of the solution.” According to the report, which analyzed data from the Census Bureau’s American Community Survey, the most inflated housing markets still see monthly homeownership costs outpacing rental costs by as much as 300 percent. The study’s authors argue that this creates a substantial and unnecessary drain on household income, especially for middle- and lower-income families. “This could mean that families may have to forgo health insurance or quality child care as they struggle to make their mortgage payments,” said Dean Baker, Co-Director of CEPR and an author of the study. “Furthermore, since prices are still falling in these markets, many homeowners won’t ever accrue any equity.” The study projects that in the bubble markets, most homeowners will leave their homes with large amounts of negative equity. For example, it projects that in New York, homeowners will have $179,000 of negative equity and in Los Angeles, the shortfall would be $277,000. In these markets, the study’s authors argue that the best use of government funds would be to provide adequate rental solutions for borrowers losing their homes. For cities where the costs of owning are much closer to rental costs, however, the study’s authors say it is likely that a small amount of equity will be accrued. In these markets, the study suggests that policies seeking to keep owners in their homes — possibly through some form of government-guaranteed mortgage — are preferable. From my perspective, regardless of what you think about Dean Baker, he does get at a point I’ve been making since — oh, since August of last year. If we’re going to spend any money on this housing crisis, we should be spending it on how we help people once they’ve already lost their homes. Doubly so in the so-called bubble markets.