Housing has always been complicated; it’s just that most folks never really noticed until the decades-old pattern of increasing home construction and increasing home values came to a blinding, crashing halt. Now the complexity is abundantly apparent – rent or own, access to credit, overleveraged mortgage loans, accurate risk underwriting, affordability, proximity to employment, patterns of land use and zoning, family income and income to debt ratios. Small wonder that pre-mortgage loan counseling continues to be a growth industry.
Despite the fact that the home construction and mortgage finance industries are a big part of the U.S. national economy, one’s views about how and where people live cannot be confined simply to the economics of housing. Lost in the debate over the future of Fannie and Freddie and possible rules that will require larger down payments for a mortgage loan is the basic matter of what kind of shelter is available in which location and for how large a price. Adjacent to that issue is whether government is being helpful or harmful to those in need of shelter.
For example, is it helpful to permit homeowners to build small separate dwellings (cottages by any other name) on what are otherwise single-family lots, as has been allowed in Seattle? Is it helpful to enshrine in law a requirement that financial institutions operating in cities and towns make equitable loans for housing and small business investments to all persons with reasonably similar credit worthiness and that those institutions do so without regard to race, gender, age, faith or an arbitrary line on a map that divides a “good” neighborhood from a “transitional” one? Is it helpful to subsidize ownership, or are home owners and home renters equally desirable members of a community whose energy, talent, and public spiritedness have made places like Dudley Street in Boston one of the most desirable and progressive neighborhoods in any city?
But alas, these are not the questions being asked in Congress nor in the State House nor in City Hall. In Congress they ask, will requiring a 20% down payment for the cheapest mortgage loans prevent another mortgage foreclosure meltdown? The simple answer is a resounding NO. There is ample evidence to prove that down payments as low as 3% to 5% are perfectly adequate when proper underwriting is carried out and where income documentation shows adequate monthly cash flow.
In City Halls, where land use rules drive choices in housing, the perpetual questions are over where to build, what to build and how to build. But little attention is paid to the questions that consider housing options. For example, is there an option to site-built homes? Is there an option to building height, width and materials rules? Is there an option to lot size, set-backs and garage dimensions? In a country with a growing population in need of decent and affordable housing these are the questions that need to be addressed. Cities and towns can’t grow if government won’t allow more choices in housing.
So the conclusion returns to full circle to the premise. Yes, housing issues are complicated, but the fundamental goal is not. Government leaders must adequately house everyone using every variety of shelter option available to serve a diverse and growing population.