Conference Presentation, Panel, Fireside Chat
American Homeownership: Do We Still Have a Dream?
Milken InstituteEric Kaplan, John Francis Barry, Michael Bright, Carol Galante, Timothy Mayopoulos, Lewis Ranieri
- Housing market recovery and equilibrium are projected to require a prolonged timeline, potentially extending beyond five to ten years, with a full resolution of supply shortages expected to take several years.
- Current conditions involve a dramatic shortage of workforce and low-income housing, driven by a lack of national strategy, which is expected to worsen as the millennial generation enters the market with strong ownership aspirations.
- Affordability challenges are intensifying, with 30 to 40 percent of households spending over 30 percent of gross income on housing, while approximately half of that subgroup exceeds 50 percent, exacerbating a system where most Americans live paycheck to paycheck.
- Construction costs are anticipated to decline significantly through the adoption of modular homes and technological innovations, though rental development remains economically incentivized for high-cost, constrained markets rather than lower-cost regions.
- Future financial risks include a 50 percent drop in housing production, a return to pre-2008 mortgage instability without restored industry standards, and predatory lending targeting veterans, while regulatory efforts have struggled to balance effective rules with unintended consequences.
- The housing deficit is characterized as a neglected national priority comparable to infrastructure, necessitating innovative financial constructs like lease-to-own and shared equity products alongside the retention of local lenders to diversify from a system entirely dependent on securities.