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64 220 200 180 160 140 120 100 80 1975:Q1 1979:Q2 1983Q3 1987:Q4 1992:Q1 1996:Q2 2000:Q3 2004:Q4 2009:Q1 2013:Q2 2017:Q3 220 200 180 160 140 120 100 80 Predominantly a buyer's market Entirely a seller's market Entirely a buyer's market Predominantly a seller's market REAL HOUSE PRICE INDEX (1975:Q1= 100)*, THROUGH 2018:Q3 *Calculated as FHFA's all-transaction house price index divided by BEA's price index for personal consumption expenditures. Note: National Association of Realtors (NAR) defines a seller's market as inventory that is less than or equal to 6 months of sales. NAR data pertain to existing homes; not available before June 1982 Data from the Census Bureau for new home inventories used before June 1982. 2006. Further, the homeownership rate was now in a free-fall as millions of homes financed with unsustainable loans were foreclosed upon. Congress decided to double down. In 2008, it passed the Housing and Economic Recovery Act, which strengthened the GSE AH Mandates and gave the Federal Housing Finance Agency (FHFA), the GSEs' new regulator, expanded powers to set GSE underwriting policy. en, in 2010, it passed the Dodd-Frank Act, which gave substantial power over the mortgage market to the newly created Consumer Financial Protection Bureau (CFPB). By Q1 2012, the house-price-to-income ratio had returned to a more normal level of 2.93. In January 2013, using its newly minted powers under the Dodd-Frank Act, the CFPB exempted government agencies from key parts of its Ability to Repay rule. As my colleague Peter Wallison and I observed at the time, it was entirely foreseeable that this action would launch yet another unsustainable home price boom. By Q3 2018, the house-price-to-income ratio was back up to 3.51 and heading higher. ese policies have driven up the price of low- and low-medium priced (largely entry- level) homes the fastest. Since Q4 2012, prices of these homes have increased by 47 percent compared to 28 percent for medium-high and high-priced (largely move-up) homes. Said another way, entry-level buyers are now paying about an extra $21,000 to buy a low- or low- medium priced home. As the chart below demonstrates, congressionally mandated credit loosening fueled these two booms, thereby making homes less, not more affordable. e parallels between these two housing policy-induced booms are striking. Given this history, let us now return to Senator Crapo's outline to examine its flaws. First, it provides an explicit federal guarantee for all (FHFA) approved guarantors. is not only puts the taxpayers even more on the hook for losses, it has the potential to expand the scope of federal mortgage guarantees outstanding beyond the already massive $6.7 trillion. History teaches us that whenever a federal full faith and credit imprimatur is extended, moral hazard results, with taxpayers the likely losers. Second, this proposal provides a further expansion of the federal government's role and control of residential mortgage finance, rather than a reduction of that role and control. It accomplishes this by privatizing Fannie e obvious solution is to take measured and deliberate administrative action now to implement GSE reform. In five years, the government's role will have been substantially reduced without any significant market disruption.