As Republican presidential candidates remain mostly silent on what they would do to fix housing, a think tank notes that homes values dropped an average of 16% since the financial crisis in 15 of 16 battleground states.
GOP candidates have focused on jobs and the unemployment rate. Yet, while fewer than one in 10 Americans are unemployed, two-thirds own a house so it could be argued that more Americans are affected by home values than by the unemployment rate, according to a new report from the Progressive Policy Institute. (Click on chart to expand list of states with large percentages of homes losing value.)
“No doubt, every contender for the White House will have a jobs plan,” the report stated. “But no economic plan can be complete without an equally robust plan to rebuild housing — and in particular, to rebuild housing wealth.”
As many as 12 million Americans owe more on their mortgage than the home is worth, yet the subject garners very little attention for candidates. Nothing was said about how to fix housing in Thursday night’s latest presidential debate, and little has been said in past debates.
PPI used the Zillow (Z) home value index to look at what’s happened to home values since 2008 in each of 16 potential battleground states: Nevada, Arizona, Colorado, New Mexico, Minnesota, Iowa, Wisconsin, Missouri, Michigan, Indiana, Ohio, Pennsylvania, New Hampshire, Virginia, North Carolina and Florida. (Click on map to expand.)
“Realistically, the big questions on the table for housing can’t be resolved in an election year — there will be no progress on the future of Fannie and Freddie. However, policymakers must also make a meaningful effort to restore the housing market and homeowners’ wealth,” according to the PPI report written by Jason Gold and Anne Kim.
Policymakers must resist the temptation of an election-year easy fix that puts too much of the burden for fixing housing on the big banks or on irresponsible homeowners, the authors said. Americans know housing’s woes were the result of a mistakes by both lenders and consumers and solutions should “share the pain and share the gain,” they said.
The authors suggest three bipartisan ideas for consideration.
One is a shared-appreciation plan. In exchange for a principal reduction on the mortgage, the borrower agrees to give the lender a share of any future appreciation when the house is sold.
PPI also suggests that Congress create “HomeK” accounts — set-aside accounts in existing 401(k) accounts — to help first-time homebuyers save for a down payment. Savers would be allowed to set aside as much as 50% of their contributions, up to a limit of $50,000.
Finally, the Washington think tank suggests Congress and the Obama administration end regulatory uncertainty over whether a 20% down payment is required for a mortgage to be a qualified residential mortgage under the Dodd-Frank Act.
“This requirement would unnecessarily stifle demand for housing and burden prospective buyers,” the authors contend.
Write to Kerry Curry.
Follow her on Twitter: @CommunicatorKLC.