Housing Hasn't Crashed—Yet

The government was forced to take on a bigger role in 2008. That came in handy in 2020

- Joe Light and Prashant Gopal

The pandemic has pulled Uncle Sam deeper into the housing market again. This time he may become too deeply embedded to ever leave.

With the economy shut down, unemployment soaring, and no clear end in sight, policymakers have been leaning on two mortgage companies the government took control of during the last housing crisis, Fannie Mae and Freddie Mac. The companies buy and guarantee home loans and then package them to be sold in the bond market. And now they’re at the heart of the government’s efforts to rescue homebuyers, mortgage lenders and servicers, and some landlords.

Even critics of government’s involvement in housing have undergone a bit of a conversion. “The private market can’t save us,” says Anthony Sanders, a finance professor at George Mason University who describes himself as a libertarian. He was a steadfast advocate for paring down Fannie and Freddie. “The tides have changed dramatically. Now we realize without Fannie and Freddie, we’d be in a world of hurt, because who else is going to buy these mortgages?”