Owning a home is not a right. It's a privilege. In the last decade, government intervention has tried to make owning a home "more affordable" with their regulations encouraging loans to people who couldn't afford them. As a result, homes were bought. As a result, mortgages went into default. As a result, homes were lost. And here we are. Now home prices are falling at a record pace. As they should. As they must.
The great boom is over. The irrational exuberance is gone. What should happen is happening. When people can't afford to buy, they stop buying and prices drop. We seem to forget that as the prices skyrocketed, we weren't handing our profits to the government as a thank you. Why should the government now be giving away money on the way down. It's irrational government politics.
We are here now, as a result of government programs that forced home sales onto people that couldn't afford them. People who had no business buying a home. And what does our government do now?
They plan to stimulate the economy by giving a tax credits to new home buyers, who probably can't afford the home without the tax credit. And if they could there is no reason to give them my tax money to do so.
If you can't afford a home without a tax credit, you should not be buying a residential home. Period. What this tax credit will do is encourage the same folks who can't afford to buy a home to go ahead and do it anyway.
If you can't afford the house, you shouldn't buy it. And why the government feels it necessary to give away $8,000 of my tax money to help someone buy a home is beyond me. Since when did buying a home become a right?
Pay for your own home. If you can't afford it, don't buy it. Wait until residential home prices drop to a range you can afford or save some more money until you can afford it. Home prices are coming down for a reason. If you can afford it, buy it. If you can't, don't. The prior housing boom was propped up by a phony economy that is now deflating in front of our eyes and all the trillions of dollars in false wealth is disappearing with it. And there isn't a thing the government can do to bring it back. No matter how much money they spend.
Happy.
ReplyDeleteYou're conflating the idea of the Community Reinvestment Act with the housing bubble. I guarantee you that the CRA had nothing to do with the housing bubble. All that it did was outlaw "redlining" where people in certain areas of towns could not get loans by banks, regardless of their financial situation, credit scores, etc, and to establish a system where you loaned people money based on their financial situation, not on the color of their skin.
Fannie and Freddie had nothing to do with the housing bubble either, because they had government-mandated standards about the quality of loans they could accept. In fact, if you look at the build-up of the housing bubble, Fannie and Freddie were losing market share rapidly. By the time the Housing Bubble was in full swing, they had lost over 50% of their peak market share to privately owned companies who were churning out junk mortgages to anybody with a pulse, and then selling them to each other on wall street.
The privately-owned credit rating agencies had a lot to do with the housing bubble, because they assured the private sector that housing prices could not go down and that demand would keep up, thus the junk mortgages could barely lose money. CNN Money and the rest of the media world contributed, and anybody calling a "housing bubble" was slurred at, called a Bubblehead.
Even the Dummies people wrote "Flipping Houses for Dummies", which should have been a sure sign that the housing bubble was fueled by insanity. It had nothing, absolutely NOTHING AT ALL, to do with Fannie Mae, Freddie Mac, the Community Reinvestment Act, none of that crap. People bought homes because owning your own home is The American Dream, and has been for generations.
Blaming this on the poor people is a pathetic tactic of people who have a crappy "us vs. them" mentality. Nobody forced homes onto them, but the mortgage brokers providing the financing did everything they could to lie people into homes. They faked homeowners' incomes, lied to them about their payments, paid off the appraisers to overvalue homes, literally did anything they could to close the sale. The FBI is in the middle of the largest fraud investigation in the world as a result of the housing crisis. Stanford and Madoff's billion dollar ponzi schemes are just a piece of it.
But of course you didn't get mad at fraud, you got mad at subsidies. You say you don't like housing subsidies? OK, give yours back. The interest on your house is tax deductible because Americans think that people should own homes. Do you have a Homestead tax exemption to your taxes, like many states in the US? Give that back too, if you have it. Does anybody you know own a family farm? Have them give their agricultural tax exemptions back.
You'll love this, then.
ReplyDeletehttp://www.chron.com/disp/story.mpl/front/6277344.html
Can't believe they are thinking this way in my beloved Texas.
Sigh.
"If you can't afford a home without a tax credit, you should not be buying a home. Period."
ReplyDeleteUh, why the hell not? Use the tax credit for a down payment and start paying your mortgage. Sure, it might overextend some people, but it'll just shave a year or two off how long a young single/couple needs to save for a down payment.
"but it'll just shave a year or two off how long a young single/couple needs to save for a down payment."
ReplyDeleteAre you kidding me. Saving time for a down payment. What makes anyone deserve anothers hard earned money to make their life easier for providing not even a service. Welcome to the socialist wealth redistribution state. When my taxes hit 60%, I think I'll cut back on my 70 hours a week and ask for a handout.