It has been more than six years since the start of the Great Recession. While the economy is no longer shrinking, the pace of our recovery is still far too slow. We must get things moving again. But how?
If we tune out the political rhetoric and just look at history, the answer is clear: We need the housing market to come alive. When the housing market is growing, homeowners refinance, developers break ground on new projects, construction employment jumps and the economy regains its footing.
Economists on the left, right and in the center will tell you the housing sector has been the engine driving us out of every major recession in the last century. The Great Recession, however, was preceded by a housing bubble and accompanied by a housing crash.
For this reason, housing could not play its traditional role in our economic recovery. The damage done to the housing market in the 2000s is a large reason the recovery has been so sluggish.
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The news is not all bad – the housing sector has begun to improve during the past year. Even so, it’s not growing as fast as our economy needs it to.
The situation we find ourselves in today requires new, creative thinking. Industry leaders and policymakers should consider what changes need to be made to restore the housing market to health.
We also need to figure out what must be done to guard against a future housing bubble and crash that would once again leave us unable to recover from recession. We need to remember back before the housing bubble inflated, to get a sense of what a normal, healthy market looks like. We also need to consider how times have changed. Due to the complexity of the housing market, we may only have one chance to get this right and prevent another housing crisis.
In considering housing reform, I have three principles:
• Regular Americans must have access to 30-year fixed rate mortgages. These are the keystones of being able to achieve the dream of homeownership and are an underappreciated part of saving for retirement.
• Mortgages must be available in good times and bad. The last five years made it clear the private market is unable to provide credit during financial crises, and we cannot afford to go months or years where mortgages are not available. There must be a system designed to function as well during panics as it does during bubbles.
• The commitment to affordable housing must be commensurate with the need. Shelter is one of the three basic human needs, and a great nation should work to make sure all of its citizens have access to a roof over their heard.
On Jan. 22, I will welcome Shaun Donovan, the secretary of the Department of Housing and Urban Development, to Tacoma. I have invited him here to look at what we are doing to chart a course forward here in the Pacific Northwest. He will keynote a conference I am convening where experts and leaders will discuss the problems and opportunities in today’s housing market and debate the future of housing and housing finance.
When considering family well-being and the health of our economy, there are few topics more important than this one.
Denny Heck, D-Olympia represents Washington’s 10th Legislative District in the U.S. House of Representatives.