Sluggish housing recovery takes a bite out of the economy
Feeble U.S. economic growth since the Great Recession is due almost entirely to a plunge in homeownership to more-than-50-year lows, according to new data released Monday.
A return to more normal homeownership levels could have added more than $300 billion, or an additional 1.8 percent in growth, to the housing economy last year, a Rosen Consulting Group study found.
“Usually when we get recovery in the economy, the housing sector leads the way,” Ken Rosen, chairman of Rosen Consulting, told CNBC’s “Squawk Box,” saying that low interest rates would typically spur on the housing market and boost ownership.
Yet, despite an uptick of 7.5 million new total households in the past decade, there were nearly 1 million more homeowners in 2006 than there were in 2016, the data showed.
Bolstering homeownership, the report said, could be the “single most important key to returning the United States to a path of robust economic growth.”
President Donald Trump “can get the 3 percent-plus growth he needs by just moving back the regulatory environment and giving a safe harbor for those lenders in the marketplace,” Rosen said. “I think it’s something that can be done by changing regulations rather than a bill in Congress.”
“Lenders are very reluctant to go outside of a very conservative lending box because of all of the penalties and multibillion dollar fines,” he said.
But Rosen stopped short of calling for a prerecession regulatory environment, which in certain cases allowed people to get mortgages without a steady job or credit score. Instead, he urged a 2002-type environment.
Rosen, also chairman of the Fisher Center for Real Estate & Urban Economics, said part of the reason homeownership is so important to GDP is it’s a multiplier effect: When people buy a new house, they spend on everything from refrigerators to furniture to landscaping.