“Housing may be the single most important and overlooked public policy issue in the 2012 presidential and congressional races” said Dan Schnur, Director of USC's Unruh Institute of Politics as he introduced the guest speaker at the Sept. 14 "Road to the White House" event.
In conjunction with the USC School of Policy, Planning & Development's Judith and John Bedrosian Center on Governance and the Public Enterprise and USC Dornsife College's Unruh Institute of Politics, USC Annenberg's Center on Communication Leadership & Policy hosted an in-depth look at the housing market with Richard K. Green, director of the USC Lusk Center for Real Estate.
Green discussed the way in which overbuilding at the start of the decade has led the United States to drop its housing construction rate from 1.5 million new houses a year down to as little as 5,000.
"The housing market is currently at its lowest level since WWII," Green said. He attributed this as the reason why the housing market has yet to recover. Green's talk highlighted the re-occuring correlation between drops in the housing market and the U.S economy.
"Every recession has been preceded by a decline in housing, " Green said, adding that the U.S. economy will be stuck until the housing market recovers.
By highlighting changes in the market over the course of the past 50 years in Los Angeles, Washington, D.C. and Miami, Green demonstrated the roles that geography and price point play in the current 40 percent drop in housing prices.
Green said that 1/4 of the U.S. population is dealing with an "underwater mortgage" in which their mortgage value is greater than the value of their house. Schnur said that a part of the issue is that "owning your house is a fundamental part of the American Dream."
Owning a house involves large fixed costs, Green said, "there's nothing wrong with renting." He added, though, that rental affordability has become a problem. "We have a moral obligation to make sure not only that people can buy houses but that they can stay in their houses," Green said.
He said part of the solution is to end long-term fixed rates. People who are now in "underwater mortgages" were often set up with a mortgage in which they didn't have to pay interest for the first five years.
However, once that grace period ended, their houses became suddenly unaffordable. Road to the White House 2012: Politics, Media & Technology is a weekly series presented in partnership with USC Dornsife College’s Unruh Institute of Politics and USC School of Policy, Planning & Development’s Bedrosian Center on Governance and Public Enterprise.
