OPINION:
A plan to end government support for homeownership (“Get the Fed out of the housing market,” Commentary, Friday) is a recipe for economic disaster that would surely throw the economy back into recession.
Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) currently guarantee or insure more than 90 percent of all home mortgage activity. Even those arguing to abolish Fannie Mae and Freddie Mac admit this would need to be a years-long transition because the private market is not operating today. Private lenders have shown little inclination to step up to the plate and fill the void that would result if the government backstop essential to ensuring liquidity and stability for homeownership were abruptly halted.
Housing is the key to long-term prosperity. Residential construction usually accounts for 5 to 6 percent of total economic output, yet it stands at a meager 2.5 percent today. We don’t have an excess supply of housing; we have record-low new home inventories and a dearth of housing demand resulting from high unemployment, stagnant income growth and a drop in household formations.
The Federal Reserve is offering ideas to stimulate demand because Fed policymakers understand that there can be no sustainable economic recovery without a housing recovery.
Building 100 homes generates more than 300 full-time jobs and $8.9 million in federal, state and local tax revenues that sustain local schools and communities across the land. New homes are needed in scores of markets that are experiencing renewed growth and confidence, but this demand is going unmet because of a lack of credit for homebuyers and homebuilders alike.
Maintaining a federal role for housing and providing credit for qualified homebuyers and builders with viable homebuilding projects is a necessary first step to restore the health of the housing market, create jobs and to keep the economic expansion moving ahead.
BARRY RUTENBERG
Chairman
National Association of Home Builders
Washington
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