If you regularly watch Sean Hannity’s eponymous show on the Fox News Channel, there is a good chance you’ve heard his nightly repeated case against Barack Obama’s management of the U.S. economy: The national debt has blown out on Obama’s watch (indisputably true), the labor-force-participation rate is at multi-decade lows (true, if for reasons more complex than Hannity lets on), millions have been added to the food-stamp rolls (tragically true), the number of Americans living in poverty has skyrocketed (also tragically true), and we have experienced a huge drop in homeownership (true, but not at all Obama’s fault).
I more or less agree with the entirety of Hannity’s indictment of Obama’s economic record. The Obama administration has overseen the worst post-recession recovery since World War II, with tepid annualized GDP growth of below 2 percent despite unprecedented assists from the Federal Reserve (e.g. zero interest rates, quantitative easing). And by basing his argument around real-life data points that show how much our society’s most disenfranchised have suffered over the past eight years, Hannity has tapped into an effective and accurate way of discrediting the driving forces behind Obama’s economic program: Keynesian stimulus, increased regulation, and higher taxation on investment and productivity.
All that said, I part ways with Hannity over Obama’s housing record. Obama inherited a housing market still hung over from its pre-recession boom, which saw homeownership rise to the most cartoonishly high levels in recorded world history. In other words, of course homeownership is down since 2008; if it weren’t, well, we’d still be living in 2008! The housing crisis arose because millions of people who had absolutely no business owning a home became homeowners. Any honest analysis would conclude that the decline in homeownership in the early years of the Obama administration was the inevitable, necessary result of economic gravity.
Even if the decline in homeownership could be blamed entirely on Obama, though, there’d be a larger problem with Hannity’s argument: Why in the world does homeownership matter in gauging the health of an economy? Wasn’t that the very mindset that caused the financial crisis to begin with? A simple policy prescription exists that would vault the homeownership rate back to its pre-recession highs: Force the banks to ease underwriting standards, let Fannie and Freddie leverage their balance sheets to the moon, deregulate the subprime marketplace, and entice Wall Street to turn the mortgage-product machine on again. But does anyone actually want that? The reality is that a 63 percent homeownership rate driven by people who can afford their homes is far preferable to a 68 percent homeownership rate driven by homeowners who are living far above their means, racking up debt, and filling their balance sheets with risk. The quantity of homeowners is not as relevant, in absolute terms or as a percentage, as their quality. One would think the financial crisis made this abundantly clear.
And this brings me to my last point regarding Hannity’s unfortunate inclusion of the lower homeownership rate as a blemish on Obama’s economic legacy. Higher prices are the reason the homeownership rate has not picked up since its initial post-recession collapse. Would Hannity be willing to join the growing chorus of us who argue that the cult of housing is alive and well, and that a celebration of higher prices is the real problem? Are Millennials having a hard time entering the housing market because of inadequate jobs and incomes? Of course. But gainfully employed Millennials are also choosing to rent in record numbers, partly because they saw the dangers of homeownership firsthand when the financial crisis hit their parents and peers, but also because prices are too high. If the homeownership rate went up 5 percent and home prices went down 10 percent, it seems likely that Hannity would declare the drop in prices a disaster.
Hannity is a popular voice in conservative America, and to avoid another housing crisis, we need such voices to learn from history and lead. There are plenty of reasons to criticize Obama’s economic record. His stewardship of the housing market is not one of them.