Posted on 09/15/2010 6:39:31 AM PDT by SeekAndFind
Few icons of the American way of life have suffered more in recent years than homeownership. Since the bursting of the housing bubble, there has been a steady drumbeat from the factories of futurist punditry that the notion of owning a home will, and, more importantly, should become out of reach for most Americans.
Before jumping on this bandwagon, perhaps we would do well to understand the role that homeownership and the diffusion of property plays in a democracy. From Madison and Jefferson through Lincoln’s Homestead Act, the most enduring and radical notion of American political economy has been the diffusion of property.
Like small farmers in the 19th century, homeowners–and equally important, aspiring homeowners–now represent the core of our economy without which a strong recovery is likely impossible Houses remain as a financial bulwark for a large percentage of families, the anchor of communities, and, increasingly, home-based businesses.
The reasons given for abandoning the homeownership ideal are diverse. Conservatives rightfully look to diminish the outsized role of government in promoting homeownership. Some suggest that Americans would be better off putting their money into things like the stock market or boosting consumer purchases.
New-urbanist intellectuals like the University of Utah’s Chris Nelson predict aging demographics will lead masses to abandon their homes for retiree communities and nursing homes. The respected futurist Paul Saffo predicts that as skilled laborers move from Singapore to San Francisco to New York and London, there is little need to “own” a permanent place. In the brave new future, he suggests, we will prefer time-sharing residences as we flit from job to job across the global economy.
(Excerpt) Read more at blogs.forbes.com ...
Why are they waiting? Uncertainty about the economy and employment. But also, the belief that home prices have not yet hit bottom. Why buy now if rates remain low, but prices will be lower in six months?
A rise in interest rates will push them off the fence and into the market, then the gears may begin to turn again. And as a probably more significant side-effect, a rise will stop the transfer of wealth from savers to borrowers.
Aye, there's the rub. The baby boomers are retiring and going into smaller homes, the "booming" population is made up of low wage illiterate and unskilled illegal aliens, the professional classes are having their wages eroded by H1Bs and the blue collar types continue to sink into service jobs (where available) as their jobs go overseas - that's hardly a base to bring housing back.
And then we have the "phantom inventory" (bank-owned houses not on the market.)
Why Housing Will Come Back. If you get two for the price of one and they kick in a free Nobel prize.
Don't forget the Repubs are about to take Congress on a wave of intense public anger. The public is looking for reform.
If Paul Ryan's plan gains momentum (and I think it will), spending will decrease which will lend a huge boost of confidence to the economy. In addition, I'm sure the Repubs are going to push for a reform of Fannie/Freddie which will put those homes back under private stewardship. The bias will be toward leading Gov't out of housing altogether. Then we will likely see all kinds of incentives to buy as private companies compete again for business. Young families will gain optimism and will have aspirations for larger houses.
All is not doom and gloom despite the messages with which the media hammers us.
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