top of mind
A New Agenda for a New President
What should the new U.S. president focus
on in the early months of 2017? Given
the massive shortage of housing in many
markets, a shortage that is making home
ownership and renting una;ordable for
many households, I would suggest several steps to spur housing construction.
Here are three ways the president and
Congress can proceed:
First, liberate community banks from
the onerous financial regulations that
arose out of Dodd-Frank, the banking re-
form law enacted after the financial crisis.
Without a doubt, there are good aspects
to the law, including safeguards against
systemic risks posed by big banks and
protections for consumers against abu-
sive lending. But let small banks compete
for customers based on how well they
serve their clients rather than their ability
to comply with complex rules that are
more appropriate for giant financial ser-
vices companies. Community banks are
the main source of funds to local builders
who historically have supplied the bulk of
our country’s housing, both for owners
and renters. They’re also a key source of
loans for small-business startups that are
essential to growth.
Second, provide more resources for
community colleges and trade schools.
The country has a shortage of skilled
construction workers. Community col-
leges can help by training the electricians,
carpenters, welders, and other skilled
workers we need to produce houses,
apartments, and commercial buildings.
Third, expand tax credits and other
incentives for developers and investors
to support new a;ordable housing for
working households. Recall that the
major-party presidential candidates
agreed during the campaign on the need
to rebuild the nation’s failing infrastruc-
ture. It’s not a stretch to see a;ordable
housing as part of that equation.
These moves would be a boon for the
economy as they address the inventory
and a;ordability issues. An added benefit:
heading o; unwelcome calls for lawmak-
ers to take even more draconian action on
housing costs. Rent control, anyone?
Lawrence Yun is
NAR chief economist.
Even though borrowers can get conventional
loans backed by Fannie Mae and Freddie Mac
for as little as 3 percent down and, from the
FHA, 3. 5 percent down, almost 40 percent of
borrowers put down 20 percent for their home
purchase in August 2016. And that percentage
shows no signs of falling. In fact, the trend is in
the opposite direction. Back in early 2014, only
34 percent put down 20 percent. It’s been rising
steadily ever since.
MARKET PULSE Jobs are growing, incomes are rising, and interest rates remain low,
yet the home ownership rate of 63 percent is at a 50-year low. The reason is a lack of inventory in many
U.S. markets. Home ownership isn’t likely to budge much, especially if interest rates start to rise, which
NAR Chief Economist Lawrence Yun thinks is likely if the economy stays healthy.
EXISTING-HOME SALES Seasonally adjusted annual rate, which is the actual rate of sales for the month,
multiplied by 12 and adjusted for seasonal sales di;erences.
INVENTORY Number of existing homes on the market at the end of the month.
PRICE National median.
5. 33 Million
SUPPLY & DEMAND
All trend lines are from August 2015 to August 2016.
Source: NAR Research
2011 2012 2013 2014 2015 2016
Percentage of Borrowers Placing a
20% Down Payment From 2011–2016