06/17/2013 05:03 pm ET Updated Aug 17, 2013

America's Housing Story: One Size Does Not Fit All

June is traditionally designated National Homeownership Month. This year, we're calling it American Housing Month. Homeownership is an important part of America's housing story -- most Americans prefer it -- but the percentage of Americans who own their own homes fell to 65 percent earlier this year, the lowest level since 1995. The falling rate is a reflection of Americans' many housing choices. It means people are choosing the housing that works best for them.

In the past, government policies overemphasized homeownership. Instead, Americans should have a variety of affordable and attractive rental and purchase options, in line with their needs and resources.

Consider these stories:
  • Juana just graduated from college -- the first in her family. She is looking for work in San Antonio and is wondering whether she should rent an apartment on her own, find roommates, or move in with her mother.
  • Christy and Melvin live in Denver. Melvin owns a landscaping business, and Christy is a nurse three months pregnant with their first child. They wonder if they should upgrade to a two-bedroom apartment or buy a home.
  • Jerry and Sonia are retired in northern Virginia. They would like to add an apartment above their garage, move in there and rent out their house -- but they are also considering moving to a condo downtown.

Each of these people must understand their personal financial situations, the long-term tradeoffs between renting and buying, trends in the local and national housing markets, and their comfort with financial risk. Their bankers help them navigate these challenges and examine their options.

Since Juana has student debt and no job, her banker encourages her to consider shared housing. But as the economy improves and more young people move out of their parents' homes, it's become harder to find apartments. To help Juana, Congress might consider increasing the tax credit for developing affordable rentals. Banks in all communities help finance rental developments.

Christy and Melvin face a different question: buy or rent? Mortgage rates are low, but home prices are rising. Their banker will advise them on what they can afford to pay, including a down payment and closing costs. Unfortunately, some new government rules may block homeownership for many first-time buyers. These one-size-fits-all rules discourage bankers from using their good judgment -- for example, Melvin's self-employment might be a roadblock, even though their banker knows them well and is confident that they can repay their loan. The government should remove obstacles that keep bankers from making mortgage loans.

Jerry and Sonia love their neighborhood, where they raised three now-grown children, and would like to stay. Their banker can help them use home equity to pay for the renovations, and they can repay the loan with rental income. But their town makes it hard to add a unit in their house, even though it expands the supply of housing and provides the elderly with more lifestyle choices. Governments should make it easier for people to "age in place."

These stories illustrate how government can help or hinder Americans' housing choices. At present, however, I believe the federal government has too big a role in how we pay for housing. More private capital -- the money that banks provide -- will make our housing market more sustainable. It will also allow government to focus on more urgent needs, such as helping first-time homebuyers or developers of affordable rentals.

Your local banker is an integral part of your community -- she knows her customers and communities better than the federal government ever will. Your local banker can help you understand the housing market in your hometown. She can help you navigate housing options, from renting to buying, in the context of your personal financial situation and long-term financial goals.

Whether your housing goal is renting or buying, your banker can help you achieve it.

Frank Keating, a former governor of Oklahoma, is president and CEO of the American Bankers Association. He served on the Bipartisan Policy Center's Housing Commission.