The following op-ed was crossposted from Roll Call.
President Barack Obama and Federal Reserve Chairman Ben Bernanke seem enamored with renting foreclosed properties to blunt price decreases and to stir economic recovery, but that’s a bandage for symptoms as opposed to a real cure.
Instead, we need to learn from the problems that landed us in this mess in the first place, working to bring government policies in line with good business sense and to incentivize market-driven development.
Or, in the words of investor Warren Buffett, “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
Lax lending standards and deceitful practices were one cause of the housing crash, but what is less well understood is how the forces driving market modification also contributed. As a result of changes to demographics, transportation costs and average household size, more and more citizens are choosing to live in urban downtowns, suburban centers and rural towns as opposed to outlying areas.
According to a recent National Association of Realtors survey, 59 percent of homebuyers want to live in neighborhoods near shops and schools, and in coming years, as the millennial and baby-boomer generations age, that trend will only increase in intensity. Similarly, in a 2010 survey of more than 1,000 home developers in the mid-Atlantic region, 60 percent of respondents said they were focusing on pedestrian-oriented, mixed-use neighborhoods to stay competitive.
If the market is moving in one direction, shouldn’t what we do in Washington reflect that in real time as opposed to a decade late? Laws covering infrastructure, zoning and financing issues already stymie market-driven, smart growth developments in support of large-lot, single-family homes. The last thing we need is another policy with the potential to further prop up and push a development type that is fundamentally out of step with what consumers want.
Helping to rent foreclosed properties, then, isn’t a long-term solution, but a stopgap measure. To really turn the tide, we’ll need to look to the future and embrace the winds of market change.
In communities that have recognized this fact, the results speak for themselves. As just one example, Oklahoma City saw significant improvements to cost-of-living, quality of life, access to jobs and transportation, and economic development in 2011 after adopting policies that incentivized smart growth ideas. In focusing on the creation of mixed-use developments and in paying notice to citizens’ desire for housing near retail, transportation and jobs, Oklahoma City turned the recession into a veritable moment of opportunity.
Duplicating that kind of success must become a national priority, or else we run the risk of further endangering our economic standing. We need to embrace, not fear, market-guided proposals on how we plan and manage our local communities, which really might be better thought of as our investments. How we construct those communities will have an enduring effect on whether we prove capable of navigating this financial crisis and returning to a period of prosperity.
In rebuilding our economy, lawmakers and the administration must take a concerted look at where America is going, with market demand and community support as the key indicators. Comprehensive housing and real estate finance policy change is the only solution that will promote economic recovery and enable the creation of great neighborhoods nationwide.