Apartment Organizations NAA/NMHC Respond To Latest:
Allies Question “Homeownership at Any Cost” Policy
FOR IMMEDIATE RELEASE
January 30, 2004
Contact: Kimberly Duty
(202) 974-2333
Kduty@nmhc.org
www.nmhc.org
WASHINGTON, DC – In response to the Administration’s new proposal to have the federal government insure zero-downpayment loans for households with blemished credit, Doug Bibby, President of the National Multi Housing Council (NMHC), issued the following statement on behalf of the National Multi Housing Council/National Apartment Association Joint Legislative Program.
“The homeownership bandwagon has many passengers and is rolling fast. But a growing number of housing advocates and economists are beginning to question whether a ‘homeownership above all else and at any cost’ policy is wise.
The Administration must understand that we need a truly balanced national housing policy that involves much more than additional questionable incentives for homeownership. There is a dangerous disconnect between our housing policy and our housing needs. Mayors and congressional commissions say that creating more rental housing should be our top housing priority, yet more and more of our limited resources are diverted to homeownership.
The election-year homeownership hype has caused us to lose sight of three important facts. Not everyone wants to own a home. Not everyone should own a home. And trying to create a nation of homeowners will ultimately harm not only many of those owners, but also our local communities and even the national economy.
Creating more homeownership opportunities for minorities is a worthy goal, but unsustainable
homeownership is not in anyone’s interest. Foreclosures are at record levels, and FHA foreclosures in particular are trending beyond levels they have ever seen before. The National Housing Conference reports that 51 percent of working families with critical housing needs are owners, not renters.
The low- and moderate-income families targeted with this initiative are more likely to buy older houses that are more expensive to maintain and are located in struggling neighborhoods where price appreciation can be elusive. With no equity and little cash reserves, these households are one paycheck away from financial disaster. Even worse, homeownership can trap these highly leveraged families in deteriorating neighborhoods.
Putting families into homes they cannot sustain has a ripple effect. If the new homeowner cannot afford to maintain their home, then nearby property values decline. If families default and abandon their houses, then cities, counties, towns and school districts also lose tax revenue. One researcher estimated that cities spend, on average, $27,000 per FHA foreclosure. Factoring in all stakeholders, every FHA foreclosure results in average total losses of $73,000.
Then there are the economic risks. Local governments have made the connection between job growth, economic growth and housing. Towns without sufficient rental housing forego valuable consumer spending and discourage businesses from expanding or relocating there because they cannot house prospective workers.
America may be a nation of homeowners, but one-third of our citizens are renters, and 40 percent surveyed report that they prefer to rent, even though they could afford to buy. American lifestyles have changed. We are busier and more mobile than ever before. Many households are choosing apartments because they offer the conveniences, amenities, shorter commutes and financial freedom they seek. Yet, policy makers still want them to be owners. Why?
Rental housing may not be as strong a political message as homeownership, but the simple fact is that this nation needs apartments. We need them for the 73 million Echo Boomers and the 13 million immigrants expected to flood into the housing market in the next decade. We need them for the millions of hard working families who cannot find affordable housing near their job. We need them to help house the nation’s nearly 74 million Baby Boomers as they age and no longer want to maintain a house.
We need them for every town that wants to accommodate population growth without giving up all their green space and adding to pollution and traffic congestion. And we need them for every city that wants to reclaim a decaying downtown neighborhood. The biggest housing success story of the last 10 years is arguably the downtown revivals taking place from Philadelphia to San Jose. Decaying and abandoned city centers are being transformed into dynamic neighborhoods with new restaurants, shops and cultural attractions. These stories owe their success not to new homeownership initiatives, but to apartment developers who took a chance and created new housing downtown.
Promoting homeownership is indeed a worthy goal, but our homeownership programs should be structured to ‘first, do no harm.’ The President’s newest proposal does not meet that standard. There will be a real cost to taxpayers, to hard working families and to towns across this country when these policies fail. Didn’t we learn our lesson after the S&L crisis that when you set in motion policy that defies basic economics, it is only a matter of time until it comes crashing down?”
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NMHC and NAA operate a Joint Legislative Program and represent the nation's leading apartment owners, managers, developers, brokers and lenders. Together, the organizations operate a federal legislative program and provide a unified voice for the private apartment industry. Nearly one-third of Americans rent their housing, and almost 15 percent of all U.S. households live in an apartment home. For more information, contact NMHC at 202/974-2300, e-mail the Council at info@nmhc.org, or visit NMHC’s web site at www.nmhc.org.