Former HUD Secretary Henry Cisneros on the Bipartisan Housing Commission
- Nov 22, 2011
Washington, D.C.—The Bipartisan Policy Center in Washington, D.C. recently launched a bipartisan Housing Commission to propose solutions for the national housing crisis. MHN talks with committee member Henry Cisneros, a former HUD Secretary and current chairman of CityView, about the goals of the Housing Commission and his projections for the future of the industry.
MHN: Describe the Bipartisan Housing Commission.
Cisneros: Well there’s a sense that the country is at an inflection point with respect to housing policy. We’ve operated under a working consensus since 1949 when President Truman articulated the national goal of a safe and decent house for every American, and over the next 60 years we slowly added innovations and institutions to the country’s housing goals and ended up with a very robust housing sector with a strong homeownership rate and with a housing finance system. But as we know, a lot of that crashed in 2007 and the years since, and so there’s a sense that the institutions that served us for 60 years need a serious re-examination—that we need to recalibrate and think through the future and think through a new framework for housing policy going forward.
There are some very basic questions on the table, such as what is the role of the government in housing? Have we tilted too far towards home mortgage programs that support and encourage homeownership but don’t do enough to augment rentals, which are so badly needed with the new demographics of the workforce? What should we do about the government-sponsored enterprises Fannie Mae and Freddie Mac? How do we address the coming demographic wave that has interesting and important dimensions, such as an increasingly aging traditional population and an immigrant population that is decidedly younger? And how do we assure that housing continues to play not only the role of decent place to live, but also one of the vehicles for moving people to the middle class where rentals are the platforms for people’s ambitions in the workplace and education, and homeownership is a mechanism, an engine, for creating wealth? All those are important questions that the country needs to address by really looking fresh at many of the policies that we’ve taken for granted and have evolved over the last 60 years. So that’s a long-winded answer to say the purpose of this commission is to take a fresh look at all the assumptions about where housing policy should go from here.
MHN: How do you feel about these topics?
Cisneros: Well I have my own personal opinion, but I’m going to reserve judgment until I hear the analyses and hear the opinions of my fellow taskforce members. I obviously have strong ideas about some of these things. I can tell you I think we need a balanced housing policy that includes rentals as well as homeownership, that I think we need entities like the GSEs, even if they’re not called Fannie Mae or Freddie Mac—but the intermediary function is a critical one and has to be played. I think that homeownership is important as one of the principle vehicles for creating net-worth for families, but I recognize that rentals are increasingly essential in a time when we want to be more mobile, when we have an elderly population that doesn’t want the obligations that come with owning a home and when we have immigrants who have as much as a generation before they can save enough to buy a home and help their children become homeowners.
There are a lot of different social objectives to be played by wise housing policy, and I have these principles that I’ve described in general terms, but for the details I want to wait until we hear the analyses. We’re going to have some top-flight experts and consultants advising us, we’re going to have public hearings across the country, we’re going to have some very expert task force members who will have opinions and bring the perspectives of banks and realtors, advocates for the poor, homeless advocates, and the objective is to create a wise, comprehensive set of policies that span the entire spectrum of housing needs in the country.
MHN: How long before the committee makes a ruling?
Cisneros: The committee has all of 2012 to work, with a goal of producing a report for the new administration in January 2013. These hearings that I described and these meetings that I’ve described and these expert studies that I described, all that will be played out over the course of 2012.
MHN: What are your thoughts on Obama’s mortgage refinance plan?
Cisneros: I think it’s important, and I have encouraged Secretary Donovan to not only execute on it, but to think of other iterations as well. We know that as long as there are families that continue to fear foreclosure, that we will have a continuing damper on not only the housing recovery, but also the national economic recovery. We have to deal with the reality of the people who feel they might be foreclosed on as well as the reality of houses in foreclosure today. It’s a multiple prong strategy, and one of the elements is the refinancing opportunity that the White House has been working on—it’s one part of a major comprehensive strategy.
MHN: You mentioned that the economic recovery is tied to the housing recovery. Do you think one can’t happen without the other?
Cisneros: We have not had a robust economic recovery in the United States since the end of World War II that didn’t include the housing sector, and that’s logical. When housing is as large a part of the economy as it is—which is to say about 15 to 20 percent of GDP, depending on housing, finance, construction, appliances, transportation of materials for housing, building materials, etc.—it’s hard to imagine how we could have a strong recovery with the housing sector on the sidelines. Any effort to go head-on and address the recovery as it deserves must include a range of housing strategies. It’s not too late. We have to continue to do this.
MHN: How do you think the multifamily industry will continue to fare?
Cisneros: I think that the rental market is strong—it has in fact been the strongest sector of all the real estate types in recent years because so little had been built in the last few years. Because the demand and the need is so great, prices have been up, property values have been up, rents have been up, and only now are we beginning to see the unleashing of construction loans and other forms of credit in such a way that the stock that we need could be built. It’s beginning to happen, but it’s going to be 2012, 2013, 2014 before we see all this play out. So the answer is, the apartment sector will be very strong in the next few years. It will probably lead all forms of real estate, although there are others. Some hotels in some markets, for example, are strong, and particular kinds of industrial space are strong, but I think apartments will be the strongest. That seems to be the consensus. I think the next few years will be very good.