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Additional Contacts:
Catherine Pulley American Bankers Association, (202) 663-5468
Julie McCahill Mortgage Bankers Association of America, (202) 557-2726
Jay Shackford National Association of Home Builders, (202) 822-0406
Annemarie Roketenetz National Association of Realtors, (202) 383-7560

WASHINGTON, July 27—Five major trade associations representing nearly one million businesses, banks and entrepreneurs that build, sell and finance housing are calling on the presidential candidates and their respective parties to elevate housing as a national priority in an effort to expand homeownership opportunities and reduce the number of Americans still living in substandard shelter or paying too much of their incomes for housing.

The joint policy statement, "Housing Policy for the 21^st Century," was adopted by the American Bankers Association, America’s Community Bankers, the Mortgage Bankers Association of America, the National Association of Home Builders and the National Association of Realtors.

The statement has been presented to the national platform committees of the Democratic and Republican parties as well as to the likely presidential candidates—Texas Governor George W. Bush and Vice President Al Gore. It has also been distributed to current members of Congress and candidates running for House and Senate seats.

The task of meeting the nation’s housing needs is more difficult today "because there are fewer government resources and more complicated and burdensome regulations administered by various layers of government," the joint report said.

Although the nation’s overall homeownership rate reached a record high of 66.8 percent in 1999, some households trying to buy their first homes—most notably young families—are still facing serious affordability problems, the report says. And large numbers of low-income renters are having to pay exceedingly large portions of their income for decent housing.

"Young households have actually lost ground," the report notes. "The homeownership rate for people under 35 has dropped 5 percentage points (from 45 percent to 40 percent) since 1979."

Fueled by both natural population growth and immigration, it is inevitable that the number of households in America will be growing substantially. In turn, the demand for housing units will continue to expand, fueled also, by wealth and income gains.

"The U.S. population will increase by 2.3 million people a year, fed by over 4 million births per year and over 800,000 new immigrants," the policy statement said. "An additional 1.5 to 1.7 million new housing units will be needed each year to cover the expected 1.2 million in annual household formations, replacement of decayed housing stock and normal vacancies. We must plan for the inevitable growth in housing demand to meet consumer demand without sacrificing other quality-of-life factors such as reasonable commutes, decent education and a safe environment for all residents."

The policy statement notes that while the private sector should continue to be the primary mechanism for meeting the nation’s housing needs, governments should seek to play a role because housing provides positive economic, social and political benefits that stabilize neighborhoods and communities and benefit all members of society. The federal government in particular, should take a supportive role in providing incentive programs aimed at low- and moderate-income households, and should lead efforts to reduce burdensome and unnecessary regulations.

Growth in consumer demand for housing should be met by employing market-sensitive planning, the report advises. Furthermore, there is no single growth plan that will work everywhere. Every community has different housing, economic and environmental goals, and growth plans must address the needs and preferences of all who need housing in the community.

The federal government can aid in this endeavor by supporting the development and redevelopment of infill sites in cities and inner suburbs. Local governments should ensure that the processes for reviewing planning and zoning applications are reasonable, predictable and fair for applicants and their neighbors.

The report states that the federal government’s support of the housing finance system—in partnership with financial institutions and through the provision of mortgage insurance and guarantees—is crucial to a stable and growing housing market. Regulations should be relaxed and incentives should be provided to encourage secondary market participation in such innovative mortgage products as financing for green building and mortgages that encourage buying homes near work locations.

In the tax policy arena, the policy statement calls for homeowner tax incentives (deductibility of mortgage interest and real estate taxes, and the exemption of capital gains on the sale of a principal residence) to serve as critical components of the federal government’s commitment to homeownership. "Elimination or reduction of these incentives would erode homeownership as well as house values, and could cause economic instability," the report stated.

The joint statement calls on all levels of government to balance benefits with cost when enacting regulations. "Public policy should seek to achieve a reasonable balance between the benefit of protecting the environment or the consumer, and the cost of excessive regulation, which interferes with the private market’s ability to provide housing to all consumers at an affordable cost." The report also called on the federal government not to infringe on the rights of private property owners.

On housing programs, the report calls for state and local housing finance agencies to work more closely with the private sector to initiate, develop and implement a variety of affordable housing programs. On the federal level, direct expenditures for housing should continue to fund low-income housing programs that increase the supply of affordable rental housing.

Noting that the federal government is in the best position to establish a national housing policy that places housing on the policy agenda for all levels of government, the joint report calls on HUD to play the central role in the coordination of all housing and community development issues. "Unless proper coordination of housing policies is achieved, efficient implementation of a national housing policy and attainment of our national housing goals will be difficult, if not impossible," the report concludes.

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Comments on the Joint Housing Policy Report by Participating Organizations

American Bankers Association

"Between 1993 and 1998, the housing sector’s contribution was 16 percent of the growth in the economy," said James Chessen, Chief Economist of the American Bankers Association. "The demand for housing will increase rapidly over the next few years and the housing sector will need to work overtime to increase this demand. How effective the private sector can be in meeting the challenges ahead depends upon the government’s willingness to commit resources and ease regulatory burdens. This partnership will ensure a healthy housing outlook for the year 2000 and beyond."

"The importance of government incentives to help the private sector provide affordable rental housing to low-income families cannot be overemphasized," said Richard D. Powers, Chairman, Mortgage Markets and Lending Technology Committee, America’s Community Bankers. "Whether it comes in the form of low income housing tax credits or creative mortgage revenue bond programs, tax incentives work and they work virtually anywhere—whether in big cities or small towns, and in every part of our country. These programs are ‘win-win’ for the lender, the borrower, and ultimately the community."

"Unfortunately, the low-income housing tax credit has not been increased since it was created in 1986," continued Powers. "As a result, it has fallen behind inflation and is helping far fewer people today, despite an urgent need for that help. We urge Congress to continue to support these creative tax incentive programs and, in particular, to increase the low-income housing tax credit for affordable rental housing."

"Government’s role in housing policy is fundamental. Safe, decent and available housing is at the heart of healthy communities," said Christopher J. "Kit" Sumner, President, Mortgage Bankers Association of America. "A robust housing economy is an essential component of an overall healthy economy. The function of government is to ensure there is a competitive housing market."

"We must find ways to make market-rate housing more affordable. Cutting excessive regulation and devising smart growth land-use policies that will accommodate rising housing demand is an excellent place to start the effort," said Robert L. Mitchell, President, National Association of Home Builders. "Overregulation is inflation. It unnecessarily drives up the cost of housing, depriving tens of thousands of young American families of the chance to achieve the American dream of homeownership.

"It is an absolute shame that citizens who make up the backbone of American society—teachers, firefighters and police officers—must often commute up to 100 miles every day to work because they can’t afford a decent home near their place of employment," said Mitchell. "Fortunately, there is legislation pending before the Senate and approved overwhelmingly by the House this April by a 417 to 8 vote that could change this situation. The bill allows cities and states to provide critical downpayment assistance to municipal employees through the use of Community Development Block Grant funds. It also requires a housing impact analysis of proposed federal regulations and raises awareness of regulatory barriers to housing affordability. It is time for the Senate to act now and follow the lead of the House."

"Rising prices, inventory shortages, extraordinary demand, restrictions on growth, rising interest rates—all these factors have contributed to squeeze many homebuyers out of the marketplace. It’s time we took a hard look at the growing crisis in that could change forever the very fabric of community life in hundreds of American cities and towns," said Martin Edwards Jr., First Vice President, National Association of Realtors.

"Lack of affordability constrains first-time homebuyers, and first-time homebuyers drive the residential real estate market," Edwards continued. "Without a steady stream of new entrants, existing owners would have no market for their homes and no opportunity to trade up. Should this trend continue, the rising costs of buying a starter home could put a damper on the entire housing market. More and more families will find themselves locked out of home ownership, or they will have to make serious compromises to settle for a lesser property in a lesser neighborhood than they could have afforded two or three years ago. Before the affordability problem grows into a crisis, policy-makers should take steps to ease first-time buyers into the market."