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Rents and home prices have skyrocketed in recent years, squeezing budgets for both renters and potential home-buyers. This post examines the data on rising housing costs and questions why more hasn’t been done to provide relief.
- Rents have increased 134.9% since 2000, nearly double the 76.8% rise in incomes over the same period. This shows how unaffordable rents have become for many households.
- According to a Redfin report, there are only 4 major metro areas where a typical monthly mortgage is lower than estimated rent. High mortgage rates are keeping many first-time buyers out of the market, further driving up demand and prices for rentals.
- The government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac have seen record profits in recent years, yet this windfall has not been used to lower mortgage rates or provide relief for buyers. The profits go to the Treasury instead.
- Ginnie Mae’s mortgage-backed securities portfolio reached $2.5 trillion this year. With virtually no defaults, they are also seeing huge profits.
- Despite this, FHA and other government loan programs have not reduced mortgage insurance costs to help make buying more affordable. Why hasn’t more been done by HUD when they have far exceeded mandated reserve levels?
- With housing costs and availability a growing crisis, leaders must make this issue central ahead of the upcoming elections. Status quo policies are failing both renters and potential buyers.
The dream of home-ownership is increasingly out of reach, but renting is also becoming unaffordable. Leaders at all levels need to take action to address this crisis and find ways to provide relief to both renters and buyers suffering from sky-high housing costs. The solutions won’t be easy, but maintaining the status quo is no longer tenable.
