As part of our education to get licensed, we had to understand both values plus laws on getting home loans. I want to introduce you to Mise's report on why home values go up, and why the amount getting homes has only increased by 1 percent.
More than 50 years of claiming to help buyers get homes, the results of the help will stagger your thinking process.
To find this article, search for Mises and read the entire report. This article is located when you click the link Mises Wire below.
To start you understanding, read this part first.
First let me tell you the crash was not President GW Bush's fault. Bush fought the congress 8 times to get them to fix the problem early on.
Mises Wire
07/03/2025•Mises Wire•Alex J. Pollock
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Listen to this article • 8:57 min
[This article was originally published in Housing Finance International.]
After more than fifty years of US government-sponsored housing finance, Why has home ownership not increased and why are houses unaffordable?
The US housing finance system is unique in the world by being dominated by the Government-Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac. GSEs are a really poor and dangerous idea. By definition, they combine private ownership of their stock with special privileges, including most importantly a guarantee of their obligations by the government, i.e. the taxpayers. This guarantee is said to be only “implicit,” but is fully real, as history demonstrates. It naturally leads to overexpansion of mortgage credit and inflation of house prices.
Fannie was made into a GSE in 1968. Freddie was created as a GSE in 1970. Thus, we in the US have had for well over half a century these two expanding government-guaranteed and government-subsidized attempts to increase home ownership and make it more affordable. But the home ownership rate has increased by only 1 percentage point during that long time.
Over the last five decades, the GSEs became enormous: Fannie’s total assets are $4.4 trillion as of March 2025, and Freddie’s are $3.4 trillion, giving them combined assets of $7.8 trillion. That’s “trillion” with a “T.” All the risk is guaranteed by the government. The GSEs are a huge and distorting commitment to housing finance which burdens our over-indebted government’s credit, although the partial private ownership allows the GSE obligations to be kept off the government’s books.
Fannie and Freddie have been majority-owned by the US Treasury since they were bailed out by the government in the panic of 2008, and the Treasury has an option to acquire up to 79.9 percent of their common shares for the price of $0.00001 per share—in other words, essentially for free. But both these GSEs still have private shareholders, too. Various proposals to make Fannie and Freddie’s stock fully privately owned have been and are being made, but this would not change the fundamental problem at all: they would still be GSEs.
In addition to the giant Fannie and Freddie, there is much more government intervention and risk-shifting to the taxpayers in the US housing finance system. There is Ginnie Mae, also created in 1968, which is a government corporation, with 100 percent of its stock owned by the US Treasury. Ginnie as of March 2025 guarantees $2.7 trillion (again with a “T”) of mortgages and is itself fully guaranteed by the taxpayers.
If we add Fannie, Freddie and Ginnie together, we find these government-guaranteed organizations represent the staggering sum of $10.4 trillion. In round numbers, the US government guarantees $10 trillion out of total outstanding residential mortgages of $14 trillion: in other words, the government guarantees about 70 percent of the mortgage credit in the country. In my opinion, this is financially ridiculous: no national mortgage market worthy of the name should have to be 70 percent government guaranteed.
There is more US government mortgage presence on top of that. The Federal Home Loan Banks (FHLBs), which are also GSEs, lend money to finance the holding of mortgages by financial institutions. The FHLBs have total assets of $1.2 trillion. The $1.1 trillion in debt they issue to fund themselves is also guaranteed by the government. This brings the total government backing of housing finance to about $11 trillion.
More than 50 years of claiming to help buyers get homes, the results of the help will stagger your thinking process.
To find this article, search for Mises and read the entire report. This article is located when you click the link Mises Wire below.
To start you understanding, read this part first.
First let me tell you the crash was not President GW Bush's fault. Bush fought the congress 8 times to get them to fix the problem early on.
Mises Wire
After 50 Years of US-Government-Sponsored Housing Finance: Why Are Houses So Unaffordable?
07/03/2025•Mises Wire•Alex J. Pollock
Print this page
Listen to this article • 8:57 min
[This article was originally published in Housing Finance International.]
After more than fifty years of US government-sponsored housing finance, Why has home ownership not increased and why are houses unaffordable?
The US housing finance system is unique in the world by being dominated by the Government-Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac. GSEs are a really poor and dangerous idea. By definition, they combine private ownership of their stock with special privileges, including most importantly a guarantee of their obligations by the government, i.e. the taxpayers. This guarantee is said to be only “implicit,” but is fully real, as history demonstrates. It naturally leads to overexpansion of mortgage credit and inflation of house prices.
Fannie was made into a GSE in 1968. Freddie was created as a GSE in 1970. Thus, we in the US have had for well over half a century these two expanding government-guaranteed and government-subsidized attempts to increase home ownership and make it more affordable. But the home ownership rate has increased by only 1 percentage point during that long time.
Over the last five decades, the GSEs became enormous: Fannie’s total assets are $4.4 trillion as of March 2025, and Freddie’s are $3.4 trillion, giving them combined assets of $7.8 trillion. That’s “trillion” with a “T.” All the risk is guaranteed by the government. The GSEs are a huge and distorting commitment to housing finance which burdens our over-indebted government’s credit, although the partial private ownership allows the GSE obligations to be kept off the government’s books.
Fannie and Freddie have been majority-owned by the US Treasury since they were bailed out by the government in the panic of 2008, and the Treasury has an option to acquire up to 79.9 percent of their common shares for the price of $0.00001 per share—in other words, essentially for free. But both these GSEs still have private shareholders, too. Various proposals to make Fannie and Freddie’s stock fully privately owned have been and are being made, but this would not change the fundamental problem at all: they would still be GSEs.
In addition to the giant Fannie and Freddie, there is much more government intervention and risk-shifting to the taxpayers in the US housing finance system. There is Ginnie Mae, also created in 1968, which is a government corporation, with 100 percent of its stock owned by the US Treasury. Ginnie as of March 2025 guarantees $2.7 trillion (again with a “T”) of mortgages and is itself fully guaranteed by the taxpayers.
If we add Fannie, Freddie and Ginnie together, we find these government-guaranteed organizations represent the staggering sum of $10.4 trillion. In round numbers, the US government guarantees $10 trillion out of total outstanding residential mortgages of $14 trillion: in other words, the government guarantees about 70 percent of the mortgage credit in the country. In my opinion, this is financially ridiculous: no national mortgage market worthy of the name should have to be 70 percent government guaranteed.
There is more US government mortgage presence on top of that. The Federal Home Loan Banks (FHLBs), which are also GSEs, lend money to finance the holding of mortgages by financial institutions. The FHLBs have total assets of $1.2 trillion. The $1.1 trillion in debt they issue to fund themselves is also guaranteed by the government. This brings the total government backing of housing finance to about $11 trillion.
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