It is in the fallout of the 2008-9 global financial crisis that the titular policy genres received unprecedented attention from scholars, the media, and the general public. The borne of such attention was directed towards identifying policy solutions that could have prevented or mitigated against the above-mentioned crisis effects on the housing industry. Because it is a capital-intensive industry, housing uniquely depends on government and banking policies. It stands to reason that favorable policies improve the industry’s welfare and vice versa. Therefore, it is necessary to identify some policy solutions.
The government provides the regulatory environment in which the housing industry operates. Inclusionary zoning (IZ) are mandatory or voluntary municipal ordinances used to provide affordable housing to low and middle-income households. These regulations demand that market-rate developments set aside some units that must be priced below the prevailing market value for up to 20 years (Glaeser & Sinai, 2013). Further, there are incentives designed to appeal to more developers to use IZ to provide more affordable housing units. Conversely, this solution presents the need for additional administrative oversight and voluntary ordinances lack robust incentives (Glaeser & Sinai, 2013). Therefore, governments’ unique role in housing becomes readily apparent.
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Banking industry policies are like an expression of societal confidence. Favorable banking policies imply robust confidence and vice versa. It is now readily apparent that the combination of private actors and poor regulations originated the crisis. Mortgage provision remains a function of banking policy and regulatory frameworks. Regulations divorced the banking industry from mortgage provision; this created numerous mortgage companies and brokers (Glaeser & Sinai, 2013). Consequently, there was a reduction in mortgage quality in the run-up to the crisis. Essentially, the conservation of the historical model would have mitigated against the crisis. This model limited mortgage provision only to those with good credit and offered minimal interest variations.
Reference
Glaeser, E. L., & Sinai, T. M. (2013). Housing and the financial crisis . Chicago: University of Chicago Press.
