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Holly Schroeder: What’s at stake in homeownership and politics

Posted: May 16, 2013 6:00 p.m.
Updated: May 16, 2013 6:00 p.m.

Holly Schroeder

 

Every new home built creates three jobs, as well as expands and increases the tax base that supports schools and our community.

Our homes are the foundation of strong communities, and it is imperative that we pay attention to the debate about housing policy occurring at the national level.

Thanks to national policy that has acknowledged the importance of the home in American family life for almost a century, generations of Americans have counted on their homes for their children’s education, their own retirement and a personal sense of accomplishment.

Despite the fact that most Americans want change that will mend the housing market, create jobs and boost the overall economy, policymakers are proposing radical changes that threaten the dream of homeownership for millions of current and future Americans.

The policies that are being considered could negatively impact Americans’ ability to buy a first home, keep their current home or enter into the move-up market.

 

Mortgage interest deduction

Eliminating or limiting the mortgage interest deduction would impose a huge tax increase on millions of middle-class homeowners and discourage prospective buyers.

Changing the deduction would cause after-tax housing costs to increase and housing demand to decrease.

Reduced demand would depress home prices – producing a sizable loss for existing homeowners – leave more homeowners underwater and fuel even more foreclosures.

Such a change in home values could weaken the economic recovery and perhaps drive the nation’s economy back into recession.

 

Mandating 20 percent down payments

The national Qualified Residential Mortgage standard that is being proposed by federal agencies would require a minimum 20 percent down payment and other stricter qualifications, which would keep homeownership out of reach for most first-time homebuyers and middleclass households.

It would take 12 years for the typical family to save enough money for a 20 percent down payment on a median-priced single-family home, according to National Association of Home Builders estimates.

Other research has found it would take even longer.

 

Creditworthy borrowers denied homeownership opportunities

Even though there is pent up demand for homes in many parts of the country – the construction or sale of which would create jobs and support local economies – lenders are not making loans to qualified homebuyers.

Overly restrictive lending standards prevent creditworthy borrowers from buying homes, which slows the housing recovery and hurts the economic recovery.

Restoring the flow of credit to qualified homebuyers will boost the housing market, help put America back to work and strengthen the economic health of communities across the country by providing tax revenues that local governments need to fund schools, police and firefighters.

Just as each home is important to the family that owns it, housing is vitally important to local, state and national economies.

It is critical that homeownership remains attainable and that access to safe, decent and affordable housing remains a national priority.

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