Heritage Foundation report blames federal intervention for housing crisis

A new report from the Heritage Foundation argues that the United States housing affordability crisis is driven by excessive federal intervention rather than a lack of it. John Gibbs, the foundation’s economics director, stated that heavy government involvement in mortgages has made homes more expensive instead of more accessible.

The report notes that despite significant federal efforts to increase homeownership, rates have remained largely stable, hovering around 65% compared to 62%-63% in the early 1960s. Gibbs characterized federal mortgage policy as a “$10 trillion experiment in boosting housing demand” that has resulted in higher prices because supply cannot expand quickly enough to meet the increased demand created by subsidies.

Federal strategies to boost homeownership include providing insurance for home loans through the Federal Housing Administration and purchasing mortgages to create mortgage-backed securities via government-managed enterprises like Fannie Mae and Freddie Mac.