PLEASE ADD YOUR NAME TO SUPPORT
THE CREATIVE SOLUTION EXPLAINED BELOW

If you are not yet a member of the AHA, please help us fix this crisis by joining AHA so your voice can be added to the voice of millions of others experiencing the same frustration as you. Together, we can make these practical solutions come to life. 

Get your Free Lifetime Membership today at – www.myaha.com.

 

Background: Economists have long articulated the formula to fix inflation issues in America. Pretty simple really. Policy Makers need to tackle these four segments to cure an inflationary cycle: Energy costs; food costs; government spending; the money supply. But when policy makers decide the first three are too tough – they usually turn to the fourth segment – the money supply – to curtail inflation. And here we are – the Federal Reserve decided to raise interest rates from 2022 through 2023 eleven times to make the “use” of the money supply so expensive that it would curtail spending and inflation. 

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THE ICEBERG OF FROZEN INVENTORY

But by raising rates so swiftly, they ensured that nearly every consumer with a mortgage at or under 4% would be frozen in place and likely never list their existing home for sale. Because if they did – for example - they would be trading out of a 2.5% mortgage and into a 7% mortgage. Nope – not going to happen. So, the policy makers have created an owner-occupant inventory crisis. They created it – they can fix it. 

But the long-term homeownership inventory crisis is about fixing four different areas of supply: 

1. The existing inventory, that typically makes up 75% of homes available for sale. 

2. The new construction inventory which is lagging way behind consumer demand. 

3. The rehabilitation of single-family homes that need repair before they can be occupied. 

4. The conversion of commercial high-rise buildings that could be turned into Apartment Homes or Condo’s or Townhomes. That one is more difficult – but there are solutions. 
    

NONE of these four segments will “fix themselves”. They will require intervention and creative solutions. We’re not afraid to recommend solutions and will be doing so in a series of PETITIONS for you and other consumers and trade groups to embrace. So – we’re starting with the existing inventory – to provide a quick solution to bring a million or a couple million affordable homes on the market to help meet the desperate aspiring homeowner demand. Other solutions in the other segments will be forthcoming. 

We ask that you help us by embracing these solutions. Just one word of caution…please don’t let “perfect” be the enemy of “good”. We’re not trying to find “perfect” – just “progress”.

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AHA PETITION #1: Use FEDERAL RESERVE Policy to Help Fix the Single-Family Housing Inventory Shortage

The data doesn’t lie. There are more Real Estate Agents in America than there are homes available for sale. The normal supply of single-family homes on the market for sale from 1985 to 2020 averaged consistently around 2.5 million units. Today it has dipped well below 1 million. And without intervention – that number is going to drop even further. There are many reasons why there is such a shortfall, but we’re in a homeownership crisis like we’ve never seen. And this will not get fixed without intervention.

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THE INTERVENTION:

The Federal Reserve (FED) purchased most mortgages made in America from 2010 to 2022 in an effort to stimulate the economy. The FED set the price for mortgages by driving interest rates down to their lowest level in history. This plan was called “Quantitative Easing” by the FED. These lower-than-ever interest rates created unprecedented demand for single family homeownership and motivated nearly every homeowner in America to refinance their existing loan to around 2.5%. 

The FED purchased these mortgage loans after they were made by Lenders - sold to Fannie Mae or Freddie Mac - and packaged into Mortgage-Backed Securities (MBS). The FED also purchased Ginnie Mae MBS at the same reduced interest rates. All in, the FED purchased most of these loans and put them on the balance sheet of the United States Government. In 2022 - to “curtail inflation” – (much of which had been created by the government itself through appropriation of stimulus money to cities, businesses and consumers during the COVID pandemic) – the FED reversed course in a plan we call “Quantitative Squeezing” because it has squeezed homeownership opportunity out of the grasp of millions of Americans. From March 2022 to July 2023, the FED raised interest rates ELEVEN times to a point where mortgage interest rates are currently above 7%. At the peak, the FED held close to $3 Trillion of these MBS on their balance sheet. 

The FED radical reduction of interest rates from 2010 to 2022 created its own unintended consequence – millions of homeowners with mortgage rates near 2.5%  - who simply refuse to sell their existing homes requiring them to trade out of a 2.5% 30 year fixed rate mortgage to obtain a new loan at above 7%. 

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QUANTITATIVE SQUEEZING

Many simply WON’T do it – and millions of others CAN’T - because they can’t afford an upgraded home purchase at 7% interest.

So here we are. In a “crisis of constriction” caused by Federal Reserve policy.

Our solution is simple – it does not require legislation or regulation – it simply requires a bold move by the Federal Reserve to create a One-Time Stimulus Plan to help reverse this national catastrophe of homeownership atrophy in America. 

HERE’S HOW IT COULD WORK

The Federal Reserve could easily create a “Specified Pool of Mortgage Money” available to existing homeowners to entice them to list their home for sale to owner-occupant homeowners. This new pool of mortgage money would match the interest rate of the existing homeowner in order for the existing homeowner to acquire their next home at the same interest rate they have on their existing home. 

We recommend putting a cap on the sale price of the existing homes that would qualify for this program at $500,000 or under so that homes coming on the market would all be reasonably affordable for first time homebuyers. That would encompass most of the homes “frozen in place” by a 2.5% loan. There are many assumptions about how many homes this would inspire to be listed for sale. The OCC indicates there are approximately 12 million first lien mortgages in the US and that approximately 65% of them have mortgages under 4%. That’s nearly 8 million homeowners “frozen in place”. Not all of them would want to move to a different home – but chances are that millions would. If it were just a million at an average upgraded mortgage of $400,000, that would mean a Specified Pool of new mortgage money of $400 Billion.  That would NOT be new mortgage money for the FED’s balance sheet – simply a swap of one house for another with a similar interest rate. The purchasers of this new pool of homes available for sale would have to purchase at market interest rates (unless the FED wanted to stand up a stimulus for them as well). Imagine what homeownership in America would be like – and the generational wealth opportunity that could be created through new homeownership stimulated by this Fed Reserve policy. Creating one million or two million new homeowners would inspire economic growth – reduce stress on rental units – empower generational wealth for homeowners – and box out institutional investors from perpetuating their “grab” of existing, affordable single-family homes to rent them back to aspiring homeowners. 

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THE FED COULD DO THIS TOMORROW

Join us in signing this petition to encourage the Federal Reserve to create an economic stimulus for America through increased homeownership by creating this specified pool of mortgages to inspire a million or more existing homeowners to list their homes for sale!