News / USA

Obama Warns Against Re-inflating Housing Bubble

President Barack Obama is seen on a phone camera as he greets the crowd after speaking in Phoenix, Arizona, Aug. 6, 2013.
President Barack Obama is seen on a phone camera as he greets the crowd after speaking in Phoenix, Arizona, Aug. 6, 2013.
— In his latest speech on the U.S. economy, President Barack Obama has outlined steps he says need to be taken to strengthen the U.S. housing market.  

The president flew to Phoenix, which was among American cities that suffered the most from the housing market collapse of 2009, to deliver his latest speech on the economy and his proposals to help extend recovery and help the middle class.

At the beginning of his presidency,  Obama made a speech in Phoenix focusing on the bursting of the real estate "bubble."

On Tuesday he said the housing market is "beginning to heal" with home prices rising the fastest in 7 years, sales and construction up and foreclosures down by two-thirds.

Obama told an audience at a high school that despite steps his administration took, Americans still need more help refinancing their mortgages, and overall the housing system needs more reform.

"We have got to turn the page on this kind of bubble-and-bust mentality that helped to create this mess in the first place, we have got to build a housing system that’s durable and fair and rewards responsibility for generations to come.  That is what we have got to do," said President Obama.
 
Obama called on lawmakers to do more to help homeowners refinance at current rates, and urged simplification of regulations blocking qualified people from getting loans.

He said he supports efforts in Congress to wind down quasi-government institutions Fannie Mae and Freddie Mac, companies whose lending practices were at the heart of the housing collapse.

The companies, he said, "made huge profits buying mortgages knowing that taxpayers would ultimately be left "holding the bag" if loans went bad."  Such practices, and Wall Street's collapse, helped to "kill Main Street."

Fixing America's broken immigration system, Obama added, would help more people buy homes and increase values.  

Obama said "no program or policy will solve all the problems in a multi-trillion dollar housing market, but said steps he has outlined can restore stability and other things.

"If we take the steps I talked about today, then I know we will restore not just our home values, but also our common values.  We’ll make owning a home a symbol of responsibility, not speculation, a source of security for generations to come, just like it was for my grandparents, I want it to be just just like that for all the young people who are here today and their children and their grandchildren," said Obama.

Obama ended his speech in Phoenix with another call for an end to political gridlock in Washington and for lawmakers to set aside "slash-and-burn partisanship" to help the economy.

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