Remarks of Secretary Julián Castro at the National Press Club
2015: A Year of Housing Opportunity
Tuesday, January 13, 2015
Thank you very much, Myron, for your kind introduction. More importantly, thank you for your service as President of the National Press Club.
I understand that this is your last event at the helm, and I know I speak for everyone in this room in expressing my gratitude for your leadership.
I’d also like to recognize your incoming President, John Hughes. I know from personal experience how effective he is as an Editor of the Bloomberg Breaking News Desk.
Last week—just a few hours before we were going to make an announcement—we learned that John and his colleagues already had the story.
While I hope that never happens again, I do wish him all the best for a very successful year. Let me also thank the Press Club’s Officers and Board of Governors for their great contributions.
Finally, I want to thank the entire National Press Club. This is the first time I’ve addressed this prestigious organization. It’s an honor because one of my degrees from Stanford was in Communication, and at one point I considered being a journalist.
Obviously I took a different path, but I’ve always appreciated the work that you do. For more than a century, the members of this organization have shined a light on important issues and enhanced our democracy.
It’s truly a pleasure to be with you this afternoon. We gather at the beginning of a new year, a time to take stock of where we are as individuals, as communities and as a nation.
And in this moment, that reflection tells us one thing most clearly — America’s got momentum. 2014 saw great progress for our economy. The strongest year for job growth since the tech boom of the 1990s. The unemployment rate dropped below 6 percent — the fastest decline since 1984.
Growth has been highest in sectors that pay good wages, like technology and manufacturing. And most significantly for us at HUD, the housing market is coming back as an engine of economic prosperity.
Today, more Americans are feeling confident because year over year home prices have risen for 32 straight months. More Americans are financially secure because homeowner’s equity is up $4 trillion since 2009.
More construction workers are back on the job because housing starts have doubled. The phones and inboxes of realtors are ringing and pinging with potential buyers.
And families are looking to the future with renewed optimism. Simply put, we’re seeing gains across the board, and HUD stands ready to take this momentum and make 2015 A Year of Housing Opportunity.
For as many things that have changed over the years, our nation’s fundamental challenge remains the same: to be the strongest, smartest and safest nation in the world. The totality of that challenge is broader than the scope of our discussion today, but I’m convinced that the central principle in meeting it boils down to one word: opportunity.
Opportunity is not an abstract concept — it’s a path to a more prosperous life, and housing often serves as its foundation. T.S. Elliot once said that “home is where one starts from.”
We call HUD The Department of Opportunity because, whether you’re rich or poor, young or old, a Republican or a Democrat — housing shapes the quality of your life. Good housing and strong communities are a source of hope.
HUD was created to—in President Johnson’s words—build a new America that’s “better, more beautiful, more liberating of life and more inspiring of the spirit.” The dedicated folks I serve with work from sunrise to sunset to fulfill this mission.
They don’t do it for the money — trust me, I’ve seen their salaries. And I know they don’t do it for the amenities — in fact, BuzzFeed once named HUD’s headquarters the 2nd ugliest federal building in Washington.
The HUD team does it because they care and because they’re committed to tackling the great challenges of our day — from poverty to homelessness, from climate change to discrimination in the housing market.
In 2015, we’re also paving a path to help folks get access to the affordable housing they need.
For many Americans, that means homeownership. Homeownership is still the cornerstone of the American Dream — a fact you can see in the lives of everyday folks.
One of them is Kim Hartman from Des Moines, Iowa. Kim grew up a foster child and was forced to change homes and schools on a regular basis.
Because of that experience, she always dreamed to give her kids better — a dream that came true this past September when she bought a home. Kim’s wasn’t an overnight success story.
She put in years of work as a pharmacy technician, took numerous financial education classes, and spent hundreds of hours helping build homes with a local HUD partner — the Greater Des Moines Habitat for Humanity. Her dream endured through it all, and now she takes pride in the fact that she has a permanent address, that her kids can board the same bus for school each day, and that her girls know she’ll be there when they arrive home.
That’s why the opportunity of homeownership is so powerful.
It’s a source of pride. It’s a source of wealth, providing both a nest and a nest egg. And it strengthens communities and fuels growth in the overall economy.
That’s also why it’s time to remove the stigma from promoting homeownership.
Some have been surprised by this focus. A few have even suggested that this is a return to the mania that fueled the crisis. It’s not.
Our nation is smart enough to heed the lessons of the past without forsaking our future. The answer isn’t to deny responsible Americans homeownership — it’s to do it right.
Since 2009, the Obama Administration has enacted historic safeguards to prevent our nation from revisiting the Wild Wild West lending environment we saw last decade.
For example, The Consumer Financial Protection Bureau now requires lenders to evaluate a borrower’s ability to repay their loan, and prohibits them from receiving bonuses for more expensive loans.
In addition, HUD has launched an Office of Housing Counseling that’s served 9 million folks, helping them buy a home when they’re ready and postpone their search when they’re not.
These actions are helping folks obtain a place to call their own. Now, there’s nothing wrong with being a renter. As a matter of fact, I’m one here in DC.
But for most Americans, who may already struggle with stagnant wages, homeownership is a better deal. Zillow says that renters are spending twice as much of their income on housing as homeowners.
Costs aren’t just going up in New York and San Francisco — they’re also occurring in places like Portland, Denver and Baltimore.
Some folks feel as if they’re misspending money by paying their landlords instead of themselves. We need to provide them with more options.
That’s where the Federal Housing Administration comes in. As many of you know, FHA has long been a beacon of hope for underserved borrowers.
We’ve insured 1.6 million first-time homebuyers in the last three years alone. And we want more folks to be able to access our services.
First, this means expanding access to credit. Some believe that a few years ago, it was too easy to get a home loan. Now, it’s too hard.
In fact, according to the Urban Institute, the housing market is missing out on 1.2 million loans every year because credit is so tight. And even Ben Bernanke recently said that he’s having trouble refinancing his mortgage.
So we’ve undergone a yearlong effort to clarify our policies so that lenders can feel more confident in working with a wide-range of creditworthy borrowers.
This has helped increase the flow of credit — and we’re going to keep building on this progress.
Secondly, we want to make homeownership more affordable for those who already qualify for a loan.
Last week President Obama announced that FHA will reduce its annual mortgage insurance premiums by half a percentage point by the end of this month.
Right now, FHA premiums are at a historically high level, and the cost of obtaining the American Dream is too great for a lot of working folks.
I’m talking about people like Brittani Kaufman from Maryland.
A dental hygienist, she told Bloomberg News that she found her dream home after two months of looking, and planned to use an FHA-backed loan to make this dream real.
But then she found out that FHA had raised its fees, and instead of paying $125 a month, she would have to pay $340 a month. She hadn’t budgeted for that much, and postponed her purchase. The thing is, Brittani is not alone.
The National Association of Realtors estimates that nearly 400,000 creditworthy borrowers were priced out of the housing market in 2013 because of high premiums. We expect our premium reduction to help more than 2 million borrowers save an average of $900 annually over the next three years.
It will also encourage nearly a quarter million new borrowers to purchase their first home.
This is a common sense step — FHA’s premiums will still be 50 percent higher than pre-crisis levels. This premium change only makes an FHA loan more affordable for qualified families.
All other FHA requirements will remain the same, including verification of a person’s ability to pay. Families still have to qualify for an FHA loan – but when they do, they will find a more affordable path to homeownership waiting for them.
Both Main Street and Wall Street believe this reduction is a win. The Center for American Progress, the National Community Reinvestment Coalition and the Mortgage Bankers Association all agree on this point.
By bringing these costs down, we’re helping folks lift themselves up — and expanding opportunity for generations of Americans.
When I reflect on the work we do every day at HUD, I think about folks like Myra Woodard from just outside Louisville, Kentucky.
Myra is a person whose determination and talent—coupled with support from HUD—helped her transition from public housing resident to homeowner last year.
In looking back at her journey, she said it wasn’t the services alone that made such an impact on her life, it was “the torch of support, compassion, understanding and encouragement that was passed through each individual and service.”
This is what we’re about — we’re about people. We’re about making their lives a bit better and giving them the chance to thrive, and that’s why we’re so focused on homeownership.
It represents family and community. It leads to stability and security.
And it’s a cornerstone of the American Dream. Over the years—through decades of economic downturns and wars—the American people have always held on to this Dream, and always will.
It’s part of the fabric of this nation. It’s what we do and who we are.
We try. We seek. We aspire.
And for many folks who’re working hard and saving, that aspiration leads them to their own home. For them, the time is now to buy.
The time is now to invest in their future. The time is now to make their dreams of homeownership a reality.
HUD is ready to help and to make 2015 A Year of Housing Opportunity.
We’re confident that families will seize it. Thank you very much.