This might be a little bit hypocritical -- it might even be extremely hypocritical. It's not that I doubt that a lot of innocent people got screwed and ended up with mortgages they couldn't afford. But the fact is that Washington's homeownership fetish is as much of a culprit as anything else. From President Bush's 2002 State of Union speech:
Members, you and I will work together in the months ahead on other issues: productive farm policy -- (applause) -- a cleaner environment -- (applause) -- broader home ownership, especially among minorities
By 2004, Mr. Bush was celebrating rising home ownership:
Americans took those dollars and put them to work, driving this economy forward. The pace of economic growth in the third quarter of 2003 was the fastest in nearly 20 years; new home construction, the highest in almost 20 years; home ownership rates, the highest ever. Manufacturing activity is increasing. Inflation is low. Interest rates are low. Exports are growing. Productivity is high, and jobs are on the rise. (Applause.)
Oh, and this isn't just a Republican thing: President Clinton brought up home ownership in his State of Union speeches too.
In their probably well-intentioned desire to promote home ownership a lot of politicians seemed to forget something: If you can't afford to own a home, you're better off renting. The rise of subprime was, to a large extent, a product of our national fixation on increasing the percentage of Americans who owned their own homes. To do this, we made it easy for people who had no business owning homes to get mortgages. And now, it's Washington to the rescue.
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Reader Comments (Page 1 of 1)
10-24-2007 @ 6:38PM
biznesspf said...
Stupid me. While the federal gov through the mortgage companies was allowing people with no money, low FICO scores, and no ability to pay for houses they couldn't afford, there I was still trying to be an amatuer investor like I had done a few times before, but little did I know (yes stupid me) that while I was paying full price for lots and putting down 20-25% for construction/permanent loans I was in competiton with people exploiting the system. No, I am not asking anybody to feel sorry for me but if we ever get around to having a housing shortage again, which is always a distinct possibility, I can assure you of one thing and that is I will never build a spec house again. Live and learn. Oh, I will survive because I am not overextended but I learned that the guvment is not my friend when it comes to me trying to earn a living building houses. Stupid, stupid me. Ja ja ja ....
10-24-2007 @ 11:04PM
vol411 said...
biznesspf, I agree with you...We all live and learn...It's awful that we've all been hood winked.
10-26-2007 @ 11:41AM
dk said...
Current ownership rates have dropped below Q3 2003 levels. Apparently mr. Bush cannot look beyond the terms of his own presidency, but then again, which politician can or will?
http://www.census.gov/hhes/www/housing/hvs/qtr307/q307tab5.html
More troublesome is the vacancy rate, currently at 2.7%. It demonstrates a demand / supply mismatch, which mean prices will have to go down so that the vacancy rate can settle at a more natural level.
http://www.census.gov/hhes/www/housing/hvs/qtr307/q307tab1.html
I blame the Federal Reserve for keeping interest rates too low, thereby creating this whole subprime mess. It would be better if the market itself could set these rates, instead of a quasi-governmental organization. Home owners themselves are also to blame, for accepting mortgages they would not be able to pay, when interest rate would rise again.