The Right Fix for Affordable Housing Finally Hit Congress

Most everyone agrees that the US has a housing shortage that’s keeping prices elevated and causing an affordability crisis for potential homebuyers. Few agree on the size of the gap. Estimates range from around three million homes at the National Association of Realtors to some eight million at consulting firm McKinsey & Co.

The government has largely fixated on some pretty dumb ideas in its clumsy attempt to address the imbalance and lack of affordability. One such fix proposed by the White House would be to use government money to buy mortgage securities in an effort to push home-loan rates lower. The problem is that lower borrowing costs only really spark the demand side, creating bidding wars among buyers. No wonder home prices are up more than 50% from before the pandemic, according to the S&P Cotality Case-Shiller US National Home Price Index.