ICYMI: Housing Affordability Starts With Supply, but It Doesn't End There

Today, RealClearMarkets published a new op-ed from The Ledger Project spokesperson Mattie Duppler on a part of the housing affordability debate that gets too little attention: financing.

The challenge is clear: the average first-time homebuyer in America is now 40 years old, and the Atlanta Fed's homeownership affordability index fell to 68 in July—its lowest level in 21 years.

Washington is rightly focused on building more homes. But addressing the housing shortage is only part of the solution. The financing needed to build and buy those homes matters, too.

A few key takeaways:

Building is only half the picture.

• The bipartisan 21st Century ROAD to Housing Act, signed into law this summer, cuts barriers to building. But as Mattie puts it, "more housing requires more than permission to build; it requires capital to finance construction and mortgages."

Capital rules reach families

• Strong capital requirements help keep banks safe and stable. But those rules also affect how much banks can lend and what borrowers pay. When requirements are too restrictive, mortgages can become more expensive or harder for families to access.
• Mattie spells out where that cost lands: "For a family buying a home, that cost shows up in two places: the rate they are quoted, and whether they are approved at all."

A timely window

Federal Reserve Vice Chair for Supervision Michelle Bowman has said that the Fed expects to finalize capital reforms before the end of the year, giving policymakers time to make sure the rules that shape mortgage costs work for families. As Mattie writes: "America needs more homes, but building them requires capital and buying them requires credit."

Read Mattie's full op-ed in RealClearMarkets here.

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