Don't Let Frank Fuel Another Housing Binge
Rep. Barney Frank and the White House are readying plans for a massive makeover of Fannie Mae and Freddie Mac, the government-supported enterprises that contributed to our economic crisis. But from the early looks of it though their plans will just repeat the mistakes of past federal housing policies.
A Washington Post article today, supposedly detailing Rep. Barney Frank’s plans, fails to share specifics or details on Frank’s ideas. Instead the article just restates his philosophy that “a lack of decent housing is central to social problems.” This idea, alluring to conservatives and liberals alike, though has always been wrong. In the end, regardless of his proposals, Frank’s fundamental vision for housing just doesn’t hold water.
The facts are simple: Judged by space, physical condition, and amenities Americans are the best housed people in the world. Things that are the norm even for Americans dependent on government aid—dishwashers, air conditioning, house-wide hot water systems, and individual bedrooms for each child—are not necessarily features of middle class housing in the UK, France, or Germany. Even after three years of foreclosures, likewise, the only countries with higher homeownership rates are places like Spain, the UK, and Israel where people seldom move and often inherit ancestral homes. If housing quality or homeownership per se cured social problems, the United States would not have any.
For a half century, however, both conservatives and liberals have believed that changing housing will somehow transform the lives of the poor. Consider: After World War II, Eisenhower administration Republicans lead efforts to clear urban slums and replace them with huge, sterile modernist housing projects. These projects though became every bit as dangerous as the tenements they replaced when Democrats established rent policies that made them unattractive to families with members who worked full time.
Great Society efforts to “organize” these projects (whatever that meant) similarly fell flat. Reagan and George H.W. Bush administration pilot programs to sell these units to their residents, not surprisingly, failed before getting off the ground. (How are jobless people without marketable skills to purchase or care for units?) Clinton administration efforts to tear down projects and replace them with New Urbanist-inspired Hope VI developments did improve aesthetics but, not surprisingly, never came close to curing the social pathologies that lead to poverty. (Welfare reform and tough-on-crime policies, however, did make a positive difference.)
The George W. Bush administration’s efforts to make everyone a homeowner—including those without the resources or wherewithal to commit to homeownership—contributed to the economic crisis but failed to promote responsibility. Frank’s dreams of a fund to help build new apartments for the poor, if he ever realizes it, will end up as another page in the misbegotten history of government housing programs.
Housing is visible and easy to understand. But simply plopping the poor into better housing hasn’t made them better off. Indeed, Frank himself has made it clear that he understands the Bush administration’s “homeownership for everyone” agenda made many lower income Americans worse off.
Insofar as the government is involved in housing policy, it should keep the goals modest. Certain government creations—30 year fixed-rate, self-amortizing mortgages and Section 8 housing vouchers to help the poor pay for apartments—do make sense. But government efforts to build, design, and engineer the way Americans are housed have done more harm than good. The government is best off setting a few ground rules, perhaps providing a few subsidies, and otherwise letting the market take its course. Barney Frank should recognize that. And so should conservatives.