What Was the Effect of the Emergency Housing Program on Single-Family Housing Construction?

The goal of the emergency housing program was to stabilize the housing market against cyclical downturns by increasing the supply of reasonably priced mortgage credit, thus increasing the demand for new homes.

The emergency housing program for single-family homes has helped many to buy homes and has generated additional housing and jobs during a depressed period for the housing industry. However, most of these benefits were lost when the long-run impact of the program was assessed since housing starts, jobs, and gross national product generated were borrowed from future periods. Most buyers bought when they did because of the program, but many said they would have purchased a home without benefit of the subsidized loan. Most lenders made the same amount or more available for loans as they would have without the program. Direct costs of the program averaged about $2,200 per mortgage assisted. Questions exist about proposed changes which would target the program to families with lower incomes than those of families that participated in the past program. This would allow the purchase of homes by those who could not otherwise afford them but would limit participation of those who could be needed to achieve program goals.

Recommendations

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