Waters at full committee hearing on long-term effects of hot housing market: “Congress needs to pass the housing title of this Build Back Better Act committee”
Today, Congresswoman Maxine Waters (D-CA)Chair of the House Committee on Financial Services, delivered at a full committee hearing entitled “Boom and Bust: Inequality, homeownership, and the long-term effects of the hot housing market.”
As we celebrate National Homeownership Month, we must recognize that home ownership is the number one driver of wealth for most families in the United States. It’s a source of stability and opportunity for families who can use their home equity to get their kids through college, start a business, and support them in retirement.
However, not everyone has been able to achieve their dream of owning their own home, and the pandemic housing boom has exacerbated these inequalities. While millions of people have been able to take advantage of historically low interest rates to buy homes or refinance their mortgages, skyrocketing home prices and other ongoing challenges have made it harder for Millennials and Gen Z, people of color and those without intergenerational wealth to compete and access homeownership. So while the Federal Reserve estimates that home equity will hit a record $27.8 trillion by early 2022, many qualified prospective homebuyers were unable to attend this wealth-building event.
These trends threaten to widen the already wide racial wealth and homeownership gap. Nationwide, black borrowers were the only group to see a decline in home loans among black borrowers. In my city of Los Angeles, for example, the black homeownership rate was 34% in 2021 — lower than it was in 1910. After a significant wealth loss during the post-2008 foreclosure crisis, black households continue to be barred from wealth-building opportunities. It is ruthless that despite historically low interest rates, this nation has still not been able to ensure that historically underserved and excluded borrowers have been able to make gains on their homes.
We’ve heard stories of black homeowners being disproportionately denied refinance loans due to rating bias and other types of discrimination, including reports that Wells Fargo rejected nearly 50% of black refinance applicants. We’ve heard stories of borrowers who have relied on mortgage financing being outperformed by all-cash buyers, including Wall Street-backed investors and iBuyers. In a hearing chaired by Mr Green yesterday, this committee heard how these home sales and conversions have harmed tenants, potential home buyers and neighborhoods.
So rising house prices are a direct contributor to inflation, accounting for 40% of price increases in the latest CPI core inflation numbers. And with recent rate hikes, we can expect that for many the dream of home ownership will remain just that – a dream.
Congress needs to pass the housing title of this committee of the Build Back Better Act, legislation I drafted that would create and maintain over a million homes. This $150 billion investment would ensure the long-term health of our economy by significantly increasing the supply of affordable housing, thereby lowering housing costs and related inflationary pressures.
Additionally, last week my committee passed my bill, the Downpayment Toward Equity Act, to provide downpayments and provide assistance to first-time buyers of first-generation homes.
I thank our witnesses and give in.