Off the campaign trail
The housing market has a major influence on the US economy but is low on the election agenda, says Simon Randall, consultant at Winckworth Sherwood
At the end of this month I will travel to the United States to compare notes with housing officials and learn about their approach to the country’s housing crisis. My main reason for visiting is to help with president Obama’s re-election campaign. I’m supporting him because he’s the candidate whose views on social issues most closely reflect my own.
Although housing has had a huge influence on the US economy, social or low-income housing hardly features as an issue in the election campaign. Homeownership is encouraged by the government, not unlike the UK, with approximately 68 per cent of people owning and living in their own homes.
The cheap mortgage market in the 1990s and 2000s with anticipated continuing house price inflation stoked up the sub-prime market. The subsequent house price crash gave rise to millions of negative equity or ‘underwater’ borrowers with many possessions or foreclosures and their distressing yard sales of personal belongings.
The US has similar problems to those in the UK, namely the shortage of affordable housing, need for the regeneration of older housing and encouraging mobility and mixed communities. However, unlike the UK, US housing is very centralised, being co-ordinated at federal level by the Washington-based Department of Housing and Urban Development whose mission is to ‘create strong, sustainable, inclusive communities and quality affordable homes for all’.
Easing the crisis
HUD controls the housing market under a wide range of legislation, including the key 1990 Cranston-Gonzalez National Affordable Housing Act, an important piece of partisan legislation governing affordable housing across the US. The Barack Obama administration has directed its recent support towards providing relief for homeowners with their mortgage payment and, through HUD, supports a range of programmes based upon the provision of home loans via Fannie Mae and Freddie Mac. It has also launched a range of community planning and development initiatives to encourage both affordable housing and homelessness programmes, often through community land trusts which have an established role within the US.
The rented sector
Market-rented housing is largely provided by real estate investment trusts, which operate successfully through the US, using significant tax benefits and establishing REITs as a mainstream investment product for pension funds and individuals alike.
While HUD is often the key co-ordinator of affordable housing provision in US towns and cities, many local authorities undertake their own programmes. Some authorities may well have propositions they’ve chosen to add to the 6 November election ballot sheet authorising special housing levies to provide assistance to undertake regeneration, build new affordable homes, provide rental assistance or encouragen homeownership.