file photo of a beautiful home in Ridgewood NJ
A Housing Market Without Fannie Mae and Freddie Mac: Effect on the Homeownership Rate
By Nahid Anaraki
June 11, 2012
Executive Summary:
For decades, Fannie Mae and Freddie Mac followed securitization policies that enabled Americans to make a low down payment when they purchased a house. This study analyzes the impact of affordable lending efforts by government-sponsored entities (GSEs) on national homeownership rate, by race, ethnic group, and census region. The results of this study suggest that despite GSE interventions in the housing market, the homeownership gap among races and ethnic groups persists because economic fundamentals and sociodemographic features, not interest rates, drive homeownership rates.
This paper uses three series of regression models to gain insight into the determinants of home ownership rates. The first regression model analyzes aggregate national-level data for 1980–2010. The second regression model analyzes factors that influence the homeownership rate by race/ethnic group for 1994–2010, where historical data are available. Finally, the third model analyzes homeownership by census region for 1992–2010, where regional homeownership data are available. The results of ordinary least square (OLS) models with robustness tests indicate: