Dan O’Connell, Governor Patrick’s Secretary of Housing and Economic Affairs, is featured in an interview in the Sunday Globe business section. In the interview, O’Connell speaks with a common sense about housing policy that has been missing in the last four administrations.
His answers to the second and third questions in the article are not shocking, but they are particularly revealing.
Q Housing prices are in decline, so doesn’t that t ake care of a lot of the worry?
A Unfortunately no — I don’t believe so. We have had some minor economic corrections in the housing market, but it appears to me that the softness we’ve seen in the past few quarters will turn around in 2007. The softness has been the longer time that units stay on the market, but we haven’t seen dramatic price cuts on either single-family homes or condominiums.
So the cost of housing and providing workforce housing for recent college graduates and for families to locate and stay in Massachusetts has to be one of our focuses. It was a principal reason for elevating housing to a cabinet level position and merging it with economic development.
Q Another housing issue relates to mortgages. Banks especially are concerned about too many people in too many risky loans. Do you have views about this?
A We’re very concerned about a rash of foreclosures occurring principally in low-income neighborhoods, a lot of that from subprime lenders and mortgage companies that aren’t held to the same standards as banks.
There’s an educational element in assisting consumers in making the best choices and enlisting banks and mortgage companies in that effort. We could also suggest to the Legislature that leveling the playing field makes sense by extending the Community Reinvestment Act to mortgage companies. That’s something we’re looking at.
In the past, state officials and the MSM would overreact to the current softening of the real estate market, and conclude the affordability crisis was nearly over. It is refreshing to hear a leading state official call it for what it is – a minor correction that will do little to open up housing for many renters and first time homebuyers.
As for the mortgage lending question, O’Connell clearly gets the link between foreclosures and the rash of high-cost lending and questionable mortgage products available these days. He, as part of the Patrick administration, is poised to make Massachusetts once again a leader in finding creative and progressive solutions to our problems by becoming the first state to extend the Community Reinvestment Act to mortgage companies.
Kudos to Deval for what seems to be an excellent cabinet appointment.
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Conventional wisdom in the affordable housing world has been to oppose continuation of the Office of Commonwealth Development and to discourage the new combination of housing and economic development, thinking that housing should simply be a stand-alone cabinet agency. Dan O’Connell’s Globe interview shows why that housing-centric view is shortsighted and why the current structure makes sense.
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The lack of private sector housing production at modest cost is becoming one of the single greatest threats to our economy. This is a leadership problem, not a budget problem. It would take billions of dollars a year to “solve” this problem with housing subsidies — money that simply does not exist. If we had the political courage to rewrite the state zoning act we could address much of the problem without spending a dime and free up resources to help the low-income people and neighborhoods in greatest trouble. That will ONLY happen if the business and institutional leadership of our Commonwealth understands the link between housing and economic growth and is motivated to do something about it. Bring it on, Dan!