Experts may disagree on whether the Chinese characters for "crisis" can or cannot be equated to the words "danger" and "opportunity." But regardless of ancient-language etymology, the concepts of danger and opportunity are appropriate to today’s housing crisis.
There’s no doubt that the crisis has caused a lot of pain. Lenders and investors have lost their shirts. Realtors and mortgage brokers have lost their livelihoods. And home buyers, many of them first-timers or minorities, have lost their homes.
But will the lessons of toxic mortgages, blind-eyed regulators, irrational borrowers and inflated appraisals be learned this time? Or will the problems again repeat themselves and will the pain that so many have endured come again to naught?
One absolutely vital lesson that simply must be learned to turn this crisis into new opportunities is that the affordability of housing, whether it is owned or rented, should be a higher public policy priority than the rate of home ownership. That means affordable housing should be part of the solution to the current crisis.
A little history supports this argument: Some six or seven years ago, the Bush administration decided that home ownership was such a bedrock of the U.S. economy that a higher overall national home-ownership rate was deemed, by definition, to be the pinnacle of government housing policy. The fallacy of this fixation on the rate of home ownership should be evident from the current crisis.
Statistics support that conclusion: In the late 1960s and throughout most of the 1970s, approximately 64 percent of U.S. households owned their own home, according to the U.S. Census Bureau. The rate spiked to 66 percent in the third quarter of 1979, inched back to 63.5 percent at the end of 1985 and then hovered in the 63-65 percent range for more than a decade. In the third quarter of 1997, the rate returned to 66 percent. But in 1999, it was up to 67 percent. In 2002, it hit 68 percent. And in early 2005, it peaked at a record 69.1 percent, after which it began to slip downwards toward the most recent figure of 67.8 percent in the first quarter of 2008.
Combine those figures with this year’s dramatic rise in foreclosures and it’s arguable that home ownership may not be sustainable for that many households. True, those folks were able to buy a home, but they couldn’t all afford to own a home.
A new public discourse about housing should start not with the fallacious assumption that everyone should own a home, but with the belief that everyone should be entitled to basic shelter. And that means the focus should be on how public policy can support not just home ownership, but housing affordability.
So far, affordable housing has been almost completely ignored in the rhetoric about how to "avoid preventable foreclosures" and, in an equally trite turn of phrase, "keep people in their homes."
Government housing agencies have a long track record of successes and failures in their efforts to supply housing for those who are in need, whether they be homeless, impoverished, severely disabled, elderly or otherwise unable to obtain shelter on their own behalf.
Yes, there have been too many instances of fraud, corruption and insider dealing in these programs. And yes, there is the sort of wasted time, money and effort that invariably plagues large organizations. But that said, government agencies have distributed billions of dollars in necessary and appropriate housing aid. Homeless shelters, low-income apartments, Section 8 vouchers and a wide variety of other programs exist because shelter should be a basic right.
These programs are even more necessary today as many home buyers are being forced back into rental housing because they can’t afford their mortgage payments. Those rental returnees must compete against an already large and growing number of other households who also want to occupy an already too-small and shrinking supply of affordable apartments.
There is no easy solution to the foreclosure crisis. But the creation and preservation of affordable housing should be a much larger part of the discussion and a much more important part of the solution.
This debate is too important to be put off until the next president takes the Oval Office in January 2009. The real estate industry needs to look at affordable housing now because in the midst of the crisis lies the best opportunity to make sure people who can’t afford to own a home still have a place to live.
Marcie Geffner is a freelance real estate reporter in Los Angeles.
Copyright 2008 Marcie Geffner. All rights reserved. No part of this article may be used or reproduced in any manner whatsoever without written permission of the author.
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