President Obama emphasized the need to invest in affordable rental housing during a speech in Phoenix.
“It’s important for us to encourage homeownership, but a lot of people rent, and there’s nothing wrong with renting,” he said. “We’ve got to make sure that we are creating affordable opportunities when it comes to rental properties. In the run up to the crisis, banks and governments too often made everybody feel like they had to own a home even if they weren’t ready and didn’t have the payments. That’s a mistake we should not repeat.”
Instead, it’s important to invest in affordable rental housing and bring together cities and states to address the barriers that drive up rents, Obama said.
Talking about affordable housing more than he has in the past, he even said the country has to keep up its fight against homelessness.
Obama outlined several key steps to help working families and strengthen the overall economy, including assisting more Americans refinance their homes, helping qualified households get a mortgage, reforming the immigration system, rebuilding the hardest-hit communities, and making sure people have a decent place to rent if they are unable to buy a home.
The address was part of a series of speeches on how to improve conditions for the middle class. In Phoenix, a city that came to symbolize the housing crisis, Obama was joined by Shaun Donovan, secretary of the Department of Housing and Urban Development.
During his speech, Obama endorsed the efforts of a bipartisan group of senators to end Fannie Mae and Freddie Mac in their current forms while outlining his principles for reform.
“I believe that our housing system should operate where there's a limited government role, and private lending should be the backbone of the housing market,” he said. “And that includes, by the way, community-based lenders who view their borrowers not just as a number, but as a neighbor.”
He also stressed that taxpayers should not be left holding the bag for the bad decisions of lenders, Fannie, or Freddie.
“We've got to encourage the pursuit of profit, but the era of expecting a bailout after you pursue your profit and you don't manage your risk well—well, that puts the whole country at risk,” he said. “And we're ending those days. We're not going to do that anymore. “
He asked people to urge members of a gridlocked Congress to take action.
“As Washington heads toward another budget debate, the stakes could not be higher,” he noted.
Here is some of the reaction to the speech:
- Terri Ludwig, president and CEO, Enterprise Community Partners, Inc.:
“Enterprise commends the Obama administration for pursuing a balanced housing policy with appropriate support to both sustainable homeownership and affordable rental opportunities. In the coming months, we will work with lawmakers on both sides of the political aisle to advance bipartisan policies that help create stable homes and economic opportunities for working families across the country."
"President Obama was right to include housing as a key component of his plan to protect and strengthen the middle class, because we know that where you live has a profound impact on the person you become. Doing well in school, landing a good job and staying healthy all seem out of reach if you don't know where you're sleeping at night or how you'll make this month's rent. Regardless of whether you own or rent, a safe, stable home is the first rung on the ladder of opportunity."
- Tim Pawlenty, president and CEO, Financial Services Roundtable:
“We are pleased to see President Obama urge Congress to reform our housing finance system. It has been five years since Fannie Mae and Freddie Mac were placed into conservatorship and we need reform to ensure a steady flow of housing finance to consumers, while limiting taxpayer risk. Moving towards a private system can be done while maintaining access to 30-year mortgages for credit worthy home buyers. The financial services industry looks forward to working with the administration, Congress and key stakeholders to reform Fannie and Freddie.”
- Sheila Crowley, president and CEO, National Low Income Housing Coalition:
“While the President mentioned the need for more investment in affordable rental housing, missing from the speech was any reference to the 7.1 million unit shortage of rental housing that the lowest income families can afford, and the struggle that low wage workers and people on fixed incomes have just to come up with the rent each month."
"A truly comprehensive housing speech would have called on Congress to pass a HUD budget for the next fiscal year that preserves the existing low income housing programs we have and restores funding for the HUD programs that have been decimated by the budget cuts and sequestration.”
- Rick Judson, chairman of the National Association of Home Builders and developer from Charlotte, N.C.:
"NAHB applauds President Obama for affirming the importance of maintaining a federal backstop as part of efforts to revamp the housing finance system and protect the 30-year mortgage. This will preserve financial stability, promote investor confidence and limit taxpayer exposure.”
"Among other reforms, the nation's home builders also support strengthening the FHA to facilitate the flow of mortgage credit to qualified home buyers, cutting red tape and easing tight credit conditions that are preventing creditworthy borrowers from obtaining home loans, and supporting the low-income housing tax credit to ensure the availability of safe and affordable rental housing. This will help spur job growth, provide homeownership and rental opportunities for all Americans and boost the economic expansion."
- Cindy Chetti, senior vice president of government affairs, National Multi Housing Council:
“We applaud President Obama’s decision to make housing a priority in his economic initiative and support his efforts to advance housing finance reform. We are encouraged that he explicitly acknowledged the importance of rental housing and that the federal government has a critical role to play. Before the housing bubble burst, too often policymakers only thought about homeownership when talking about housing policy."
“As Congress considers housing finance reform, it must avoid a one-size-fits-all approach. Unlike single family, the multifamily market uses commercial mortgage debt products. Imposing single family market reforms on the multifamily sector could undermine the ability to provide rental housing to millions of Americans, including student housing, seniors housing, affordable housing and military housing.”
- Barry Zigas, director of housing policy, Consumer Federation of America:
“Access to sustainable, affordable home finance has been a fundamental supporting pillar of the American dream. President Obama’s speech reaffirmed that fact. The policies he outlined are important, positive steps that will help Americans build economic and family security through a strong and resilient housing economy.”
“The low-income housing tax credit and rental assistance programs are critically important in our current economy, where stagnant wages and persistent under-employment challenge even the most dedicated housing developers. Support for existing programs, and expanding them, even in a constrained budget environment, is an investment in critical economic and social infrastructure.”
- Chris Estes, president and CEO, National Housing Conference:
“Housing must be at the center of our national economic recovery, just as it was at the center of the crisis.”
NHC welcomes the President’s proposals that would:
- Create a new mortgage finance system that uses use a limited and explicit government role to ensure reliable access to long-term fixed-rate mortgages, finance for multifamily housing nationwide, and support for affordable housing;
- Restore neighborhoods damaged by the foreclosure crisis, building on the successes and lessons learned from the Neighborhood Stabilization Program, the Hardest Hit Fund, and the Distressed Asset Stabilization Program;
- Create and preserve affordable rental housing in cities, suburbs and rural areas across the country, which requires a federal budget sufficient to invest in these essential needs, and preservation of key tax provisions like the low-income housing tax credit;
- Expand refinancing options to help families stay in their home and reduce housing cost burdens; and
- Clarify mortgage rules to expand access and affordability while bringing certainty and transparency to lending markets, thereby ensuring that mortgage lending serves all responsible borrowers, not just those with wealth and pristine credit.