Former HUD Chief Cisneros Looking to Buy In Mission Bay
Submitted November 22, 2011, 1:16 AM
Former Secretary of Housing and Urban Development Henry Cisneros spent Nov. 21 in the Bay Area searching for apartment acquisitions and speaking about broken U.S. housing policy. “I spent the morning looking at apartment locations in Mission Bay and the Potrero Launch area. To me, it is uplifting to see UCSF investing in stem cell research and the new hospital,” he said. “The Bay Area is one of the most advanced and highest potential regions in the country.”
Cisneros was keynote speaker for the 34th Annual Real Estate and Economics Symposium sponsored by the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley. The all-day event was held at the Westin St. Francis Hotel in San Francisco.
Speaking under the title “Agenda for Fixing Housing in America,” Cisneros said that of all the actions the Obama administration took to ease the punch of the financial crisis, the efforts to fix housing have been the least effective. Losses to homeowners have reduced consumer wealth by $7 trillion, he said. The sluggishness of housing has held back the recovery. Nationwide, 2.2 million properties are vacant.
“So what might be elements of a housing turnaround? What should the shape of the U.S. housing market be long-term?” he said.
Cisneros is co-chairman of a Housing Commission that has been formed by the Washington-based Bipartisan Policy Center. The commission was launched Oct. 26 and is to examine what role the federal government should play in shaping U.S. housing going forward. That includes an examination of the effectiveness of current regulation, guarantees and tax spending. The goal is to spark action in Washington.
The housing problem has three elements: the immediate issue of foreclosures, including the scale and their effect on surrounding properties; the shape of new housing policy given the failure of the previous structure; and the “bridge” or transition between the two, Cisneros said.
In August, the Federal Housing Finance Agency, the conservator for both Fannie Mae and Freddie Mac, issued a request for interest to investors on how Fannie, Fred and the Federal Housing Administration might sell in bulk the thousands of single-family homes, condos, duplexes and other small housing properties that they own. The request contemplated single investments of no less than $50 million and as large as $1 billion and said properties could be turned into rental housing, resold or even demolished.
Edward J. DeMarco, acting director of the FHFA told a Congressional subcommittee in early November that his agency had received more than 4,000 responses to the request and was reviewing the input, according to a statement of his prepared remarks.
Cisneros said he backed the effort, despite what he described as “political resistance” to the idea from some quarters because the beneficiaries would not be homeowners. “It would stem the decline in housing prices and benefit the remaining homeowners. It would create jobs, pay local taxes and remove community blight,” Cisneros said. “This large-scale initiative is an idea whose time has come.”
Cisneros emphasized the importance of rental housing for the country today and the role it would play in U.S. housing policy going forward. Fifteen million households live in multifamily housing, he said, and as the homeownership rate falls, that number will surge. Already the homeownership rate has dropped to 65.9 percent from 69 percent, he said. For every 1 percentage point drop in the rate, more than a million households enter the rental housing market.
The federal mortgage-interest deduction is expensive for the federal government, Cisneros said, and “dwarfs what we do for rental.” But the message from the crisis should not be a reduced emphasis on home ownership, which studies show has played a role in lifting Americans into the middle class.
“Clearly people became homeowners who shouldn’t have been,” he said. “But it doesn’t obviate the need for strong homeownership in the United States. It is the ticket to the middle class and for minorities especially, who have a homeownership rate of less than 50 percent.”
