With the new administration and Congress tasked with righting the nation’s sinking economic ship, it seemed an apt time to talk politics, housing policy, and economic forecasting with Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies. A former assistant secretary for housing and a past director of the Office of Thrift Supervision, Retsinas has a particularly well-informed opinion when it comes to national housing policy. The government’s takeover of Fannie Mae and Freddie Mac, he says, amounts to nationalization of the country’s housing finance market. It’s not ideal, but “we’re in a strange world,” he says. “We’re in a world where no one thinks anyone will pay back anything they borrow. When you believe that, no one will lend. If it weren’t for the government, no one would be lending.”
Q: What needs to be at the top of the new administration’s agenda for HUD?
A: The immediate agenda facing the new administration, including HUD, is twofold: There has not been appropriate recognition that housing is, in part, at the core of the problems we face economically. I can’t understand why, a year into this crisis, we haven’t agreed on a simple, streamlined loan modification process. ... We need to also address the demand side. … We’ve made progress in affordability, but we need to make sure we couple that with addressing people’s reluctance to buy. The strength of the housing market has to do with the strength of the job market. The new administration has to put forward a back-to-work program.
Q: Do you see anything positive happening for the housing industry this year?
A: There are some signs for the possibility of recovery. Housing is becoming more affordable. That has increased interest in housing. The other sign that would give us some hope is that I do think there’s a latent demand. We still have a growing population waiting to be unleashed; fundamentally, they need a place to live.
Q: Millions of Americans are facing falling home values and foreclosure. Do we need to rethink the concept of homeownership as the American dream?
A: I don’t think the concept of homeownership has been discredited. I think there is a reawakening that homeownership is not riskless. We have to make sure people understand that.