We Can't Afford This House (no more real estate corporate welfare)

National Review Online ^ | 20 July 2010 | Christopher Papagianis and Reihan Salam

[Notary Sojac]

Yep, right, you betcha, and absolutely correct, sir!

[raybbr]

The political case for federal intervention was strong. Americans had come were led to believe by lobbyists and politicians that took the lobbyists money that homeownership was essential to economic security and that it made for better citizens.

That's how it should read.

[Notary Sojac]

Can’t argue with you....

[Liberty Ship]

The article is correct. Clinton and Bush stupidly assumed that if you gave people a house, you could endow them with the qualities of character associated with people who acquired homes on their own.

Really, I often think that the only good thing about the Bush Administration was Cheney.

Bush infuriated me with his American Dream initiative:

http://www.hud.gov/offices/cpd/affordablehousing/programs/home/addi/

I’ll never know if this initiative was naive stupidity or an attempt to buy votes back from the even more irresponsible Liberal machine. Either way, I felt as if it was a BIG part of the creation of the real estate bubble, as well as its collapse. A lot of those people moved into homes at asking price and never made a payment.

[ken5050]

A well reasoned piece. One area that I would like to see addressed in more detail is the psychological aspect of ownership. As was pointed out, early on, substantial downpayments,a nd short term mortages, were the norm. Now, when it became possible to buy a home with literally nothing down, and 30-40 year amortizations..then is that reall “ownership”...or are you really just renting...It’s similar in many ways to the question of buying vs leasing a car.

[SMARTY]

The “O” administration is like sharks on a feeding frenzy... they smell blood in the water.

These guys are raiding the till while there is still anything worth having.... the more America is deconstructed and bankrupt… the better “O” will look to his idiot supporters who only consider the immediate, temporary and personal.

“O” supporters actually think he’s a god who can step in and do some kind of miraculous ‘fix’ which has somehow escaped the ability or attention of his VERY capable predecessors and contemporaries … people actually who DO possess experience and an understanding of these things!

What a tribe of howling monkeys we have in DC!! It is as if the entire nation has developed this kind of ethical torpor and mental inertia.

Has every one of the politicians in DC been drugged or suffered massive head trauma! How can they all sit there conducting business as usual when while the “O” house-of-cards administration ransacks industry, demolishes constitutional integrity, loots the economy and thumbs his nose a the American RIGHT to national sovereignty???!!!

[Repeal The 17th]

With today’s difficulties involved in financing a home, maintaining a home, and selling a home, I think there will be a shift towards more renting and leasing in the future.

The unemployed who are lucky enough to find a new job don’t need an albatross of home ownership in a market where there are no buyers.

All three of my grown kids rent/lease their houses for less than my mortgage payment. They like the flexibility in that it allows them easier options if relocation becomes necessary.

If I thought I could sell mine at a ‘reasonable price’ today,
I would be gone tomorrow, and find a lease/rental property.

[raybbr]

I’ll never know if this initiative was naive stupidity or an attempt to buy votes back from the even more irresponsible Liberal machine.

Bush couldn't have THAT naive for eight years. I no longer ascribe to Bush as a conservative. In my mind he was/is another liberal idiot when it comes to fiscal policy.

I would like to know how he and Cheney ever sat down and had domestic policy discussions. Were they like Matalin and Carville? All show to the public but in bed together in private? Or, all show to the public and fought like Mary and James did on screen in private?

[Terry Mross]

The first sentence is wrong. The credit was not extended. The time to close on the contract that was entered into by April 30th was extended because some of the homes weren’t finished.

And as you’ll notice builders are crying ‘cause the sales have dried up. I don’t know what the answer is except to “go to the mattresses”.

[kitkat]

You omit the fact that Bush tried fourteen times to get Congress to put oversight on Fanny and Freddy. He was aware that the sub prime mortgages were harming the purchasers and the country. Congress refused.

[kitkat]

***when it became possible to buy a home with literally nothing down, and 30-40 year amortizations..then is that reall “ownership”...or are you really just renting...It’s similar in many ways to the question of buying vs leasing a car.***

Agreed! And the quality of “doing without” in order to save to buy a house was missing. “Owning?” a house w/o earning it does nothing to instill the qualities necessary to be successful.

[Louis Foxwell]

“O” supporters actually think he’s a god who can step in and do some kind of miraculous ‘fix’ which has somehow escaped the ability or attention of his VERY capable predecessors and contemporaries....

There are far too many dimwits among us who have yet to have their eyes pried open to see O as Mark Twain's nickel plated angel.

For the average American private sales of homes with short term mortgages - 10 yrs or less - is an acceptable road to financial security. For the rest renting simply makes more sense.

[SMARTY]

There are loans extended to the most uncreditworth people on earth.

I used to work in a bank, in the file room. I made NO money. I filed loans and loan applications. I could not believe the people who received loans for homes and cars whose debt was huge and whose income was not much better than mine.

I could NOT believe my eyes!!

[super7man]

Seems to me that all the $8K tax credit does is increase the price of the house by $8K. In a competitive market, 2 buyers will just increase what they could otherwise offer by $8K.

So the credit benefits the seller not the buyer.

[unixfox]

Seems to me that all the $8K tax credit does is increase the price of the house by $8K. In a competitive market, 2 buyers will just increase what they could otherwise offer by $8K.

Funny you should mention this. I saw a forecloure owned by GMAC that was listed at $159,900. As soon as the tax credit went away (literally the next weekend) they dropped the price to $149,900.

Coincedence?

[Notary Sojac]

Bush could have made it clear, starting in 2005 or 2006, that institutions holding bad mortgage paper, no matter how big, were operating 100% at their own risk. This would have required no congressional action at all.

Instead, he signed the Paulson-Pelosi bailout.

[Notary Sojac]

If I borrow 300,000 to buy a house, the interest is tax deductible.

If I borrow 300,000 to do just about anything else, there is no deduction at all.

Now, I understand that the government has no inherent right to my money, and that failure to tax does not equal a subsidy,....but

A selective deduction such as this nevertheless is in a way corporate welfare for the building and real estate sectors that is provided to no other sector of the economy. There is no reasonable case to be made for that sort of unequal treatment.

[Think free or die]

"A lot of those people moved into homes at asking price and never made a payment."

I read our local sheriff's sale notices from time to time, and look at the background information that is public record. What you say is often true. Lately, I'm rankled by a family in our community whose house I pass regularly when I take my kids to swim practice. They bought their house in 2006, and entered foreclosure proceedings in early 2008. They are still living there in no apparent distress, despite being over $500,000 in debt and underwater on the mortgage. The kids continue to belong to the summer swim club and participate in the usual upper middle class life, they have 3 late model cars in the driveway (Lincoln Aviator and 2 nice sports cars), and the house always has flowers and pretty decorations out front. Meantime, they're in arrears on taxes and probably stopped paying their mortgage almost as soon as they moved in.

The absence of shame over financial irresponsibility really galls me. Their debt, like that of so many families, will be spread around to the rest of us as the written-off losses trickle down through the economy.

I wish their situation were an isolated occurrence, but I see similar ones all over our upper-middle class community. It's the financial equivalent of hit-and-run driving.

[SkyPilot]

At the end of June, the House of Representatives voted to extend the $8,000 homebuyers’ tax credit, by an extraordinary margin of 409–5.

The author is either completely misinformed, or 100% wrong. Either way, he dumps his credibility by opening his piece with this falsehood. The HoR voted to extend the deadline of the tax credit ($8,000 for new home buyers, $6,500 for buyers who had lived in their previous homes for at least 5 years, with income cap limits for both categories) beyond 30 June IF and ONLY IF they had sold their homes by 30 April but were unable to close by 30 June. That's it. There were too many people trying to close by the 30 June deadline, and ran into problems with loan qualification deadlines, appriasals, and all the other trappings of closing. The tax credit was NOT extended. Only the paperwork deadline for those who had already sold by 30 April.

According to the Office of Management and Budget (OMB), the mortgage-interest deduction is expected to cost $637 billion over the five years ending in 2015. The exclusion of capital gains on primary residences is expected to cost another $215 billion over the same five years, with the deductibility of state and local property taxes on owner-occupied homes adding $151 billion. In total, these subsidies will reduce federal revenue by well over $1 trillion over a decade during which the federal government is expected to run a $9 trillion deficit. A gradual phase-out of these subsidies is therefore not only smart economics, but a fiscal necessity.

This just drives me insane.

So, let's try and buy into his rationale: the government should be allowed to steal more of people's money via confiscatory taxation, because it is somehow justified that allowing people to keep their own money "costs" the government too much? People get to be taxed LESS because they are allowed to deduct interest on mortgages, and he is arguing for the government to eliminate this and take MORE of people's money?! Great. Just great.

He tries to argue that with the debt and deficit, we can't "afford" this tax break - and implies it will go to paying down the national debt, and/or reduce annual budget deficits. Good luck with that one.

Here is a brilliant clue he seemed to miss: when the home buying tax credits stopped, the market reacted vehemently in the negative. SURPRISE! The government temporarily decided to take LESS of people's money at the point of a gun, and the market reacted favorably. As soon as Uncle Sugar elbowed his way back into the room to demand more tax money for his pockets, the market dries up.

Gee....this is hard to fathom......

He has some good points: not everyone should have a house. We can thank liberals for trying to "give" every moron a mortgage they could not afford. But eliminating tax deductions for current home owners is stupid and will hurt everyone.

Which is precisely why it will probably happen.

God help us all.

[SkyPilot]

What you say is often true. Lately, I'm rankled by a family in our community whose house I pass regularly when I take my kids to swim practice. They bought their house in 2006, and entered foreclosure proceedings in early 2008. They are still living there in no apparent distress, despite being over $500,000 in debt and underwater on the mortgage. The kids continue to belong to the summer swim club and participate in the usual upper middle class life, they have 3 late model cars in the driveway (Lincoln Aviator and 2 nice sports cars)

Exactly, and that story is repeated throughout the country.

My wife say a TV show about a couple who bought a short sale. A short sale can be a real headache, but they went for it. The bank, and the current owner, have to agree on a lot. It is better for the owner to go through a short sale rather than full scale bankruptcy.

The buyers went through every hurdle, and after all that - all they needed were for the current home occupiers (they weren't even owners anymore) to hand over the house keys.

Well, they didn't want to, so they delayed. They filed for "extensions." One week. Two weeks. Three Weeks. Two months. Three months......

On and on.

Finally, their agent called them, and handed the new rightful owners the keys. The squatter family either gave up or ran out of town.

But, they lived there for months.....basically rent free.

Judges, Obama henchmen, and just about everyone else won't apply the rules to people and make them leave houses they don't own anymore. It is "unfair."