In this episode of “On the Hill,” Tim Rood, Head of Industry Relations, talks with Mark Zandi, Chief Economist of Moody’s Analytics, about the government’s role in tackling the affordable housing crisis. “We’ve gone nowhere on homeownership for decades,” Zandi said. “That’s a problem, particularly for lower-income Americans of color, because homeownership is the most critical way to building wealth.”
The Biden administration should pursue supply-side efforts – such as incentives to change exclusionary zoning -- and narrowly target first-time homebuyer tax credits or other demand-side support to avoid inflating home prices, Zandi argues. In addition, the government’s plan to change the capital framework for Fannie Mae and Freddie Mac would be counterproductive, and “detrimental to the goal of expanding homeownership to underserved communities,” he said.
Zandi recently co-authored a white paper on the affordable housing shortage in the U.S. One of the more surprising obstacles is a dearth of credit for construction and land-development – which dried up during the housing bust and never fully recovered. “The fact that that market has never really come back -- particularly at smaller banks that are key to small builders -- which are key to building homes in the lower price point of the market – that has been a real problem,” he noted.
Zandi co-founded Economy.com, which Moody’s purchased in 2005, and serves on the board of directors of MGIC, the nation’s largest private mortgage insurance company. He is lead director of “Reinvestment Fund,” one of the nation’s largest community development financial institutions. Zandi frequently testifies before Congress and is often quoted in national and global publications, and interviewed by news media including CNBC, NPR, Meet the Press, CNN, and more. He also hosts the “Inside Economics” podcast.
Listen to the podcast here.