If you're waiting to see what Congress and the White House have up their sleeves to help home buyers, sellers, renters and builders make it through the worst housing recession since World War II, don't hold your breath.
There are no short-term mortgage interest subsidies coming, despite their successful use (at little cost to the Treasury) during the 1973-75 housing slumps by the Republican Ford and Nixon administrations.
There are no efforts under way either on Capitol Hill or in the Reagan camp to activate rental assistance programs for moderate-income families in tight markets -- again despite their successful use during the mid-1970s.
To the contrary, all the emerging signals on housing in the nation's capital point to a policy of benign neglect via the "free market." Or worse.
Consider the following:
* In a little-publicized report just delivered to Congress, the Reagan administration argues that there is "no current nationwide shortage in the rental housing market." The forces of the "free market" are handling housing problems adequately for the vast majority of the American public, according to the report. That's despite a vacancy rate under 5 percent nationwide, and under 2 percent in many major U.S. cities.
* Draft recommendations circulating from the President's Commission on Housing call for an end to important financing tools used by home sellers and buyers throughout the country. The commission plans to urge federal preemption of state laws that require mortgage lenders to allow assumptions (takeovers) of low-rate loans by home buyers. The pro-consumer policies of state legislatures that have guaranteed buyers and sellers the right to pass along existing loans would be nullified by Congress, under the commission's plan.
The Reagan commission also plans to allow the Federal Housing Administration, which pioneered the long-term, assumable mortgage in the 1930s, to insert controversial "due-on-sale" (anti-assumption) clauses in its future home loans.
Finally, the administration is seriously considering asking for termination of all state tax-exempt, bond-financed housing programs. These are perhaps the most important source of below-market-rate mortgage money in dozens of states during the past year.
In the very week that new construction of single-family homes hit its lowest level in 22 years, and unemployment in the home-building trades crept toward 20 percent, the head of the Reagan housing commission congratulated the industry on its "resilience." At an off-the-record meeting with top national homebuilder leadership in Boston, William McKenna said the "free market" -- not short-term mortgage assistance -- is the only way out of the present crisis.
A top Treasury official, in what department sources described as a trial balloon with a calculated purpose, suggested the administration and Congress should limit the tax deductibility of mortgage interest as a way to raise federal revenues. The secretary of the Treasury later backed off from the idea, but pressure for the concept could grow as the White House's budget-balancing problems increase this fall.
What is most striking about the current atmosphere on Capitol Hill and in the administration is its utter contrast with what prevailed in earlier housing crunches.
When interest rates soared to record levels and housing starts dropped near one million units in the fall of 1974, the Republican administration in office put to work a program called the "tandem plan" for over 300,000 home buyers:
The federal government agreed to purchase mortgages made by private lenders to home buyers at interest rates 2 percent to 3 percentage points below the prevailing market rate. The government could hold onto these mortgages, and later sell them at either a profit or a loss.
When interest rates in the economy came down during the period of holding, the government could sell the mortgages at a break-even price or a small profit. When rates rose or stayed flat, the government would absorb the 2 to 3 point subsidy -- and pay for it out of congressional appropriations.
The tandem program stimulated nearly $12 billion worth of mortgage lending, put hundreds of thousands of people into homes they couldn't otherwise afford, and helped thousands of construction workers get off unemployment compensation. The estimated gross federal cost--without calculating the positive ripple effects on federal, state and local tax revenues--was $400 million.
If the Reagan administration truly believes interest rates will be heading downward in the next two years as the result of its "free market" economic policies, a tandem plan approach -- with mortgages at 13 or 14 percent -- could be a shrewd investment that would do wonders for consumers. Unfortunately, no such plan appears to be in the works.