Housing affordability key to democracy and reducing inequality

(Evan, Nonresident Senior Fellow @ Brookings, “Around the halls: Built environment issues that could define 2022,” pg online @ //um-ef)

DEMOCRACY DEPENDS ON DELIVERING HOUSING AFFORDABILITY Evan Siddall, Nonresident Senior Fellow The next year’s most pressing issue in the built environment relates to the complicated interaction of the COVID-19 pandemic, climate change, low interest rates, uncertainty on housing prices, and the resulting increase in socioeconomic inequality. These factors are hurting housing affordability and creating a new landed gentry of homeowners who keep getting wealthier. Essential workers, nurses, teachers, and the people we take for granted to make our morning coffee—the backbone of our economy—can no longer afford to buy homes and are falling ever farther behind. The pandemic-related urban exodus has also driven suburban housing prices higher, as have supply chain distractions and a skilled labor shortage. Monetary policy is aggravating the problem, since housing markets are highly rate-sensitive. Legacy fiscal policies and government-sponsored enterprises (Fannie Mae and Freddie Mac in the U.S., and my former employer, Canada Mortgage & Housing Co. in Canada) continue to add inflationary stimulus in the form of mortgage securitization and mortgage insurance. If we are to preserve the integrity of our western liberal democratic system, we need to attend to housing affordability so that everyone can enjoy the safety and sense of belonging that a secure home represents.