Governments Dumbfounded By Home Prices
The housing dilemma has central planners fumbling for answers, especially in California. Could it not be argued that making loans easily available has fueled home prices, making housing less affordable? As the ContraCosta piece says, "Welcome to the strange world of housing policy."
"Federal housing policy..is much more generous to middle and upper-class home owners than to low-income renters (and) is a long-standing approach with wide support from both major parties. In California, the state's official bank for lending for affordable housing can't find takers for all the money it has to lend to first-time home buyers." That says a lot.
"By overstating the potential benefits of homeownership, today's policy makers risk diverting resources away from more effective means of addressing many of the most critical problems that confront low-income and low-wealth households," said William Apgar.
John Perkins of the Home Builders Association of Northern California, predictably wants the government to butt out, or does he? "Such efforts have 'been well-intentioned but (with results) very different than those who created the policy envisioned.' Government should 'get out of the way of the enterprises that create housing, that is, the region's home builders. The members of my association would like nothing more than to produce housing for the most needful people in the market. The government needs to find a way that makes economic sense.'"
More of this, Mr. Perkins? "Since 1996, developers have exercised program options that allowed them to convert 16,300 of the state's subsidized apartment units into market-rate units, and as many as 73,200 more could be converted."
Here's a solution. Require 20% down and housing will be affordable in 6 months.