Nearly 40 years ago, President Ronald Reagan famously quipped, "The nine most terrifying words in the English language are 'I’m from the government and I’m here to help.'"
It was a succinct way to encapsulate how, at times, the federal government's efforts to help Americans often create a bigger mess, bringing unintended consequences.
We are seeing that now with the housing affordability crisis.
In his last State of the Union address, President Joe Biden focused on the high cost of homes with a smorgasbord of policies.
However, despite last year's attempts, the national median average of a single-family home climbed to $364,750 in the last quarter of 2024.
The housing market is complex, and making homes "more affordable" for Americans is no easy task. A conflux of policies can influence supply and demand, and Washington's policymakers need to proceed cautiously.
Unfortunately, the previous administration's ill-informed policies are the reason why housing is still out of reach for too many Americans.
As the Trump administration creates its roadmap to address the housing crisis, it should learn from the Biden administration's missteps.
Fewer, not more, targeted policies will open the door to more homeownership.
As Edward Pinto, the director of the American Enterprise Institute's (AEI) Housing Center, noted in testimony before the U.S. House Ways and Means Committee in 2022, federal housing and monetary policies drive up housing prices, "Collectively, [federal housing finance]policies will further expand government intervention in housing markets at a great cost to millions of Americans, pushing up prices as well as rental rates, wasting taxpayers' money and making housing less affordable."
Many of those policies make obtaining a mortgage easier for potential homebuyers.
Additionally, housing demand increases, yet restrictive zoning and land use regulations have created a shortfall in supply.
We know what happens to prices when demand is greater than supply.
Being priced out of the market has particularly harmed minorities and low-income Americans who are trying to build generational wealth but cannot get past the affordability barrier.
However, there is a path forward: reducing the government's role in the housing market.
As the Cato Institute's Norbert Michel, vice president and director for the Center for Monetary and Financial Alternatives, has outlined, limiting Fannie Mae's activity, reigning in its overreach, and keeping it focused on its mission to provide liquidity for mortgage financing, for example, could go a long way.
The Biden administration should have taken this advice before launching a slew of misinformed government programs. One such program waives the lender's title insurance policy requirement for certain refinance loans purchased by Fannie Mae.
A less widely known and understood type of insurance, title insurance protects homeowners against threats to their property rights, ensures lenders' mortgage priority is secure, and allows financing to flow.
Without title insurance, homeowners could be on the hook for significant legal fees or, worse, lose their homes.
What could go wrong with expanding Fannie Mae's role to overseeing title insurance?
At its core, the pilot program is an ineffective policy.
Waiving title insurance in limited refinancing scenarios or otherwise will not make homebuying any more affordable for Americans while also driving up risks; it's like rearranging the deck chairs on the Titanic and expecting the ship to miss the iceberg.
In fact, the program was so controversial that President Biden even received criticism from his own party during an election year.
Fannie Mae barging into territory Congress explicitly granted to the states, and one in which it has zero experience, also threatens the backbone of the U.S. economy: small businesses. In fact, the title insurance industry has more than 155,000 individuals employed by small businesses.
More broadly, the pilot program is an example of Washington ignoring state sovereignty with misguided policy that does nothing to fix the problem.
Title insurance is regulated at the state level, and it's not the federal government's role to intervene, as state lawmakers and attorneys general have pointed out.
The Trump administration has an opportunity to take a new approach that dials back the ill-informed policy flood from Washington and focuses on incentives to increase housing supply and reduce regulatory burdens. More big government is not the answer.
John Burnett is the host of the First Edition Show on Newsmax2. He is an adjunct assistant professor at New York University and the founder of 1 Empire Group. Read John Burnett's Reports — More Here.
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