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Mr. Chairman and Members or the Committee:

I am pleased to be here to discuss with you the problem of home-ownership affordability and two bills (S. 664 and S. 1078) that are directed at this problem. As you are aware, homeownership costs have risen rapidly in recent years. Concern over the decreasing ability of many families to afford homeownership is reflected in many recent proposals.

My remarks today will focus on four areas:

1. The budget trade-offs involved in directing more assistance toward homeowners and the current emphasis on homeownership assistance in federal spending on housing;
   
   
2. The recent changes in homeownership affordability for particular categories of homeowners. This subject is discussed in a recent Congressional Budget Office report: Homeownership: The Changing Relationship of Costs and Incomes, and Possible Federal Roles¹
   
   
3. The potential impact on homeownership affordability problems of the proposal included in both bills to expand Federal Housing Administration insurance of graduated payment mortgages and of the proposal included in S. 664 for tax-free individual housing accounts; and
   
   
4. A brief description of some alternative mechanisms to address homeownership affordability problems.

This document is available in its entirety in PDF.

1. Other papers prepared by the CBO that focus on federal housing policies include: The Section 8 Housing Programs: Budget Issues, July 1976; Housing Finance: Federal Programs and Issues, September 1976; A Budgetary Framework for Federal Housing and Related Community Development Policy, February 1977, and Housing Assistance for Low- and Moderate-Income Families, February 1977.