Housing Crisis: The Unaffordable American Dream
As the chief executive of Fannie Mae, Priscilla Almodovar has a front-row seat to the housing crisis plaguing the United States. With over two decades of experience in housing policy, she’s witnessed the challenges firsthand. Today, home prices are at an all-time high, and mortgage rates remain elevated, making it difficult for buyers to enter the market.
A Highly Unaffordable Market
“It’s a highly unaffordable market right now,” Almodovar says. “We’re monitoring and following trends we’ve never seen before.” Home prices have reached record highs, and buyers are facing unprecedented costs. Even though mortgage rates have come down, the average mortgage payment has hit a new record high of $2,070, up 24% from before the pandemic.
The Lock-In Effect
The housing market is stalled due to the lock-in effect, where current homeowners are unwilling to sell their properties and buy new ones at higher interest rates. This phenomenon has resulted in home sales being 57% lower than the previous year, preventing the sale of 1.33 million homes.
Addressing the Nation’s Housing Challenges
Almodovar believes that addressing the housing crisis will require more than just presidential initiatives. It will take policy makers at the federal, state, and local levels to work together to bring down the cost of housing. “There’s a consensus today that part of the solution is more supply,” she says. This means preserving existing homes and building new units.
Local Obstacles
Many obstacles to increasing housing supply are controlled at the local level, including zoning and NIMBY-ism (not-in-my-backyard). “The No. 1 issue is the local. That’s where decisions really get made,” Almodovar notes.
The American Dream
Despite the challenges, most Americans still aspire to own a home. About 84% of respondents in a recent survey said that homeownership is part of their American dream. Almodovar grew up in New York City, where her parents bought their first home when she was 5 years old. She recalls that achieving homeownership was seen as a milestone, and it’s still “very much ingrained in what we think, and the mindset of our country.”
Climate Risk
Rising insurance costs are also making homeownership unaffordable for many Americans. Climate change is posing significant challenges to homeowners and the housing industry, with recent natural disasters like hurricanes Milton and Helene causing widespread damage. Fannie Mae is monitoring climate risk closely, and government agencies are working to offer assistance to affected homeowners and impose a moratorium on foreclosures.
A Collaborative Effort
Ultimately, addressing the housing crisis will require a collaborative effort from all sectors. “Climate is one of those areas where there’s no one silver bullet,” Almodovar says. “It’s really all sectors working together, and all industries working together.”
Leave a Reply