On Tuesday, the Senate Banking Committee received testimony from key players in the effort to modify the United States housing finance systems. It appears that the Senators generally agree that supporting the conservatorship of Fannie Mae and Freddy Mac is a risky and deeply flawed situation; they cannot seem to agree on just how to end this problem though. In the words of an Ohio Democrat, “…we have an affordable housing crisis in this country.” The bottom line is the Senators believe Fannie Mae and Freddie Mac’s lack of capital could result in another bailout, to the detriment of Americans in general (as well as to the housing market).
In general, nobody is confused that the cost of housing is becoming unaffordable for a large swath of Americans; there are a few ideas on how to solve this. First, there’s the possibility that state and local regulations regarding new construction is making it impossible to build new houses to keep up with demand (as this blog has mentioned more than once, when supply is low and demand is high, the selling price naturally goes up), resulting in unaffordable housing. Alternatively, it may be a better solution to increase the affordable housing goals of the mega mortgage companies by forcing them to allow all credit-worthy Americans to have access to strong mortgages.
Ultimately, it is unlikely that the Senate will agree on anything in the near future, but it is important to note that the affordable housing crisis is on their mind. To that end, they will eventually make efforts to reduce the overall cost of homes through one of the methods mentioned above. The net result will likely be a short-term decrease in the price of homes, so would-be home buyers should keep an eye on what the Senate proposes to do about the problem and capitalize on the favorable market.
At the Chernov Team we understand that knowledge is power, and knowledge of how the market will behave in the near future is certainly powerful knowledge. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.
