Almost everyone seems to have forgotten that the catalyst for the previous housing bubble and crash was the federal governments demands that lenders extend mortgage loans to people (primarily minorities) who did not qualify and had no reasonable prospects of being able to afford the payments.
Not letting the Banks off the hook, but didn’t the Community Reinvestment Act require Banks to give a high percentage of their home loans in the ‘sub-prime’ category so more minorities could own? Under penalty of prosecution? That aspect is missing from this story.
BTTT
In the end, this is all about the Left spreading the wealth. Housing and loose lending, couple with government subsidies and backing is a mere shell game that simply redistributes the wealth.
Why else would you ever want someone to buy a house with $1,000 down payment with a loan with artificially low interest rates courtesy of the Feds along with the backing and guarantee of Fannie or Freddie. The answer of course is that the government will step in on those many loans that will go bad and payoff the banks with money from responsible taxpayers. Poof, you’ve just redistributed the wealth courtesy of the Left who is NOT as much interested in “helping the poor” as they are interested in buying their votes to keep them in power.
These know-it-alls who write policies should look in the back yards of us normal folk before coming up with their hypotheses which they treat as Gospel. The way things are now, let's say a person who doesn't handle responsibility or finances real well gets a house with next to no down payment. They are less likely to pay for major repairs and be good about upkeep, as that would be their money. When they no longer want the house and it isn't in good enough condition for a sale that covers their mortgage, they have an out. They can stop paying that mortgage and live rent-free until foreclosure happens. The money they've saved by not paying the mortgage can be used to start out somewhere else.
I wonder how long before we have a rental market collaspe. Where I live they are building a lot of apartments. The rents are several hundred dollars monthly more than home ownership of a existing home.
Seems to me that when people start buying used homes these buildings will sit empty. At some point the average guy is going to start buying homes again. From what I see the only ones who can afford homes now are the people on welfare or the high wage earners. Not the blue collar worker. They seem to be locked out of the market by the new rules.
“everything will be fine because house prices will go up.”
This is the worst canard. Housing prices should only go up if the market can support them, not just as a general principle. If they are being buoyed by easy flowing money from the government, then they are not rising because of true market forces, and will eventually have to crash, because the government cannot keep the money faucet turned on forever.