Voters judging President Obama’s economic policies this fall have a lot to think about. There is the fiscal stimulus, the auto bailout, saving Wall Street and then reforming it, not to mention health-care reform.
How the administration handled the foreclosure crisis probably won’t figure large in the picture. But it should.
Housing was ground zero for the Great Recession. Between early 2006 and Obama’s inauguration in 2009, average house prices fell by a third across the country. In certain areas, including cities as diverse as Akron, Orlando and Las Vegas, house prices fell by more than half. Homeowners lost some $7 trillion in equity, and foreclosures surged. Millions of busted mortgage loans led to hundreds of billions of dollars in losses, sending the U.S. financial system to the brink of collapse.
Housing’s problems have remained an economic millstone, slowing the U.S. recovery. Historically, housing rebounds from recessions quickly, propelled by low mortgage rates. Home sales and housing construction have often powered rapid and substantial job creation, but not in the current recovery. While sales and construction have started to rise again, they have yet to add jobs on net.