The Upward Spiral of Housing Intervention


Want a textbook demonstration of the fundamental media bias toward government intervention? Read the top of this New York Times front-pager:

U.S. Offers a Hand to Those on Eviction's Edge
SAN MATEO, Calif. — Two years into a merciless downward spiral, Antonio Moore was threatened with living on the street.

Total amount of money I have spent on buying automobiles in my life: $5,750

He had lost his $75,000-a-year job as a mortgage consultant, his three-bedroom house with a Jacuzzi, his Lexus sedan. He could no longer pay even the rent on his cramped studio apartment — not on his $10-an-hour part-time job as a fry cook at a fast food restaurant.

Faced with eviction, he was staring last month at the imminent prospect of joining the teeming ranks of the homeless. His last hope was a new $1.5 billion federal program aimed at preventing that fate.

Days after Mr. Moore applied, a check for $775 was on its way to his landlord, enabling him to stay — at least for now.

Much like the Great Depression, when millions of previously working people came to rely on a new social safety net for their sustenance, a swelling group of formerly middle-class Americans like Mr. Moore, 30, is seeking government aid for the first time. Without help, say economists, many are at risk of slipping permanently into poverty, even as economic conditions improve.

The question is whether the modern-day safety net has enough money and the right initiatives to aid those who need it most.

I would say there are more "questions" than all that, including: How, precisely, does The New York Times determine/verify what anyone's "last hope" is? And, what effect does massive and continuous government goosing of home prices (and repeated efforts to keep owners in houses they can't afford) have on the affordability of housing on the lower end of the market? Needless to say, this goes unasked.

I wish Moore the best, particularly since he's looking after some kids who are growing up in rough circumstances. But as someone who has made $75,000 in exactly four of my 22 years in the full-time workforce, I can testify that one's financial wiggle-room improves considerably when you don't buy a $400,000 house with a jacuzzi in the back yard and Lexus in the driveway near the top of a housing bubble in one of the country's most expensive markets. As ever, I'm considerably more exercised about bailing out the irresponsible decisions of Goldman Sachs than I am about the irresponsible decisions of individual home-buyers, but, well, check out The Times' other sob story:

They have three boys, a 12-year-old, and 9-year-old twins. At the house they have rented for seven years, on a street lined with well-tended lawns, the walls are covered with photos of her boys in their batting stances.

Until 2008, their painting business was pulling in $100,000 a year, which paid their $2,450-a-month rent and allowed them to buy a trailer on Clear Lake, where they took the boys water-skiing.

But last year, in a weak economy, they earned $38,000. They sold their trailer. They ran through $15,000 in savings. One day last winter, Ms. Martin noticed the refrigerator was nearly empty, and her checking account balance was down to $100. She drove to a county office and applied for food stamps.

Again, I hope it all works out. But it's a sign of just how credit-dependent and savings-averse this country has become that a six-figure income* is not enough to build more than a few months' worth of financial cushion. And there are two ways that a family of five can pay rent for less than $2,450 a month–move to a place that they can actually afford, or have a baseline rental market in which prices are allowed to go down.

At all levels of government, policies designed to promote "affordable housing" have, perversely if predictably, conspired to make the stuff more expensive, while encouraging the kind of unsound choices we see in the examples above. Protecting everyone except actual property owners (some, anyway) from the consequences of all these terrible decisions may draw applause from the news reporters at The New York Times, and make us feel good about allegedly averting a spike in homelessness, but it actively worsens two of the main pathologies that create homelessness in the first place.

* UPDATE: It's unclear from the story whether the $100,000 was "income" or "revenue," though I'd guess from the juxtaposition to the "earned" $38,000 that it's the former.