What Does HUD Have to Show for the Trillions It’s Spent?

The U.S. homeownership rate was 64% in 1967, two years after the department opened. Now it’s . . . 64%

By Jack Ryan. Mr. Ryan is a co-founder of REX, a home brokerage firm, and a co-Author of “Bringing Adam Smith Into the American Home.” Excerpts:

"In the signing ceremony for the HUD Act of 1965, Johnson promised that it would “become known as the single most valuable housing legislation in our history.”

What are the results? In 1967 the U.S. homeownership rate was 64%. Nearly six decades and $3 trillion of spending (in 2024 dollars) later, according to the U.S. Census Bureau, the home ownership rate is nearly . . . 64%.

Homeownership rates in Europe average 69%, according to the European Union. Yet most EU members have nothing like HUD’s mortgage companies—Ginnie Mae, Fannie Mae and Freddie Mac—and the Federal Housing Administration and the Federal Housing Finance Agency, all of which are meant to boost homeownership. With scores of federal housing guarantees and incentives, the U.S. probably meddles in its housing market more than any country this side of China."

"According to the Census Bureau, the average price of a home was $22,000 in 1967 and is now $500,000. Home prices have increased at a 5.5% annual rate since the establishment of HUD, while overall inflation has averaged only 4%. In 1967 the average home cost about three times an average family’s income; today, it’s seven times."

"When people buy homes with smaller down payments and government-guaranteed debt, home prices move artificially higher. These prices, supported by unrealistic capital structures, stress the financial system."

"The $3 trillion in HUD spending is only part of the price tag for taxpayers. A 2019 MIT/Sloan study puts the cost of bailing out government-backed mortgage companies such as Ginnie Mae, Fannie Mae and Freddie Mac after the 2008 financial crisis at $500 billion. The housing crisis of 1989 cost about $300 billion in 2007 dollars. The FHFA writes off about $25 billion a year in bad mortgages, according to its May report."

"the U.S. has spent about $4 trillion since 1965 without increasing homeownership, making homes more affordable or reducing rents."

"Bipartisan deregulation from 1976 to 2000 dramatically reduced the cost and increased the supply of stock-brokerage and telecommunications services as well as air, rail and trucking transportation. In addition to lower costs and better service, deregulation led to innovations such as cellphones, discount airlines and exchange-traded funds."