The U.S. presidential race has done an amazing thing: It has made $28 trillion disappear.
That’s how much all the homes in the United States are worth. It’s one tenth of everything the U.S. owns. It’s more money than the entire economy produces in a year. And if you only listened to the presidential candidates, you’d never even know it existed.
This is a problem.
The president wields enormous influence over the housing market. The Department of Housing and Urban Development, which answers directly to the president, spends over $40 billion a year. Fannie Mae and Freddie Mac, which are currently owned by the federal government, hold a portfolio of $5 trillion in housing assets. They buy 72 percent of all new mortgages. The IRS gives homeowners $75 billion a year through the mortgage interest deduction—and billions more when they sell their homes for long-term capital gains.
So why don’t we hear about housing on the campaign trail? Why haven’t the debate moderators asked a single question about it? Why are the $1.2 trillion in student loans so much more talked about than the $13.5 trillion in mortgage loans?
We have made this mistake before.
The presidential elections in 2000 and 2004 were similarly devoid of housing policy. No candidate dared question the unprecedented and unsustainable rise in prices or the accompanying explosion of household debt. No one asked whether underwriting standards had gotten out of control or whether the banks should be taking such highly leveraged bets on nontraditional mortgages. No one thought it was necessary to mention that such high prices would make homeownership unaffordable for the next generation or that minorities still didn’t have as much access to the American dream as the rest of the population. Even when economists raised concerns that Fannie and Freddie could go bankrupt and require a taxpayer bailout, no major politician bothered to do anything about it.
We paid the price for their silence. The Great Recession was the worst economic crisis since the Great Depression, but it didn’t have to be. Our leaders could have tempered our expectations and restricted our excesses. They could have shone a light on new financial products and trends that seemed to deviate from historical norms—and even if they didn’t know what to do about it, they could have started a conversation before it was too late.
The only defense they have is that they could not have imagined how much it all mattered. They could not have foreseen how badly it all would end.
We no longer have that defense.
We know how fragile our housing finance system really is—how precipitously it can stop working, how rampantly it can disrupt our global society, and how long it can take to reassemble that delicate stability.
We also know (though we may have forgotten) how dynamic our housing finance system can be—how much wealth it can create, how many families it can nurture, and how vibrant a community it can cultivate. To run a presidential campaign without addressing housing is to forgo these goals. Surely, none of the current hopefuls would embrace such a capitulation.
And so, we must make housing part of the conversation.
Each generation of policymakers faces new challenges in housing. For the presidents of the nineteenth century, it was carving up the frontier and building new settlements on previously ungoverned plots of land. In the 1930s, it was resolving delinquent mortgages and jumpstarting bank lending from the depths of the depression. In the 1960s, the presidents turned their attention to racial discrimination and neighborhood segregation. From the 1980s forward, the focus was financial innovation and rapid growth.
There is no shortage of challenges for the current generation. In many cities, rents are rising faster than incomes, lenders are hesitant to trust borrowers, and jobs aren’t paying enough to cover down payments. Unsurprisingly, many young adults aren’t forming their own households. For minorities, these problems are even worse, with the Great Recession deepening and reinforcing the inequities that already existed between racial groups. If these trends continue, we risk losing everything our previous presidents have fought to achieve.
“The Great Recession was the worst economic crisis since the Great Depression, but it didn’t have to be.”TWEET THIS
The presidential campaigns to date have largely ignored these issues, and housing has gotten virtually no attention during the debates. One notable exception is tomorrow’s New Hampshire Housing Summit, sponsored by the Terwilliger Foundation for Housing America’s Families, where we will hear from 5 candidates on their views on housing. We need more programs like this.
The next president will inherit $28 trillion of peril and promise. No citizen is immune to these outcomes. And yet, no candidate has told us what kind of housing system we are voting for. With so much on the line, we deserve to know.
Ben Carson Photo by Gage Skidmore
Hillary Clinton Photo by Marc Nozell
Ted Cruz Photo by Gage Skidmore
Martin O’Malley Photo by Karen Murphy
Bernie Sanders Photo by Phill Roeder
Donald Trump Photo by Gage Skidmore
Man Walking Photo by Timothy A Clary