A major housing policy change has been initiated by the Obama Administration. The change starts by abandoning the ownership society envisioned by former President George W. Bush. Instead, the federal government will use about $4.25 billion funds under the economic stimulus program to create federally subsidized rental houses in various cities.
The concept involves building low-rise rental town houses and apartment buildings and purchasing foreclosure houses to be renovated and rented at affordable rates to low and moderate income families.
According to industry analysts, the new housing policy of the Obama Administration takes a different approach from the Bush Administration’s policy of encouraging homeownership for national wealth creation and providing mobility for families in the low and working class.
They pointed out that the way Housing and Urban Development (HUD) Secretary Shaun Donovan change the federal housing policy indicated that the Obama Administration has acknowledged that homeownership is not for everyone.
Analysts also said that the change in the housing policy is also a practical response to the soaring foreclosure rate, worsening economic crisis and tight credit.
Housing Financial Services Committee Chairman Barney Frank said that the American dream should not be homeownership but a home.
The $4.25 billion allotted for the rental housing program will be taken from the funds that HUD received under the economic stimulus package. Additionally, $4 billion had been set aside to repair the 1.2 million existing public housing units in the country. The funds for the rental program will be made available to states as competitive grants.
Aside from the economic stimulus funds, the Obama Administration is also seeking $1.8 billion for rental housing construction.
Some analysts said that it is still too early to tell if the Obama Administration’s decision to shift from homeownership to rentals will benefit the working class and minorities. They still believe that homeownership provides more benefits than just creating a home equity.
But they also conceded that renting is better than placing people in houses that they could not afford to pay.
In the past weeks, Donovan went on a series of trips across the country to promote awareness of the use of the federal economic stimulus funds to construct rental houses for low and moderate families.
The HUD is hoping that the thousands of town houses and apartments that the program will be able to produce nationwide would help ease the problem of homelessness that the foreclosure crisis has created.
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