Government Spending

Affordable Housing Is Not a Crime

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Close to all transit. Partial views. Just needs TLC.

Now that you've wiped away yesterday's tears and begun to accept that sales of overpriced U.S. real estate have again slumped, Mike Riggs says it's time to turn that frown upside down.

At the Daily Caller, Riggs, (a former Burton C. Gray Memorial Intern for Reason) swings one fist labeled "Tim Cavanaugh" and another one labeled "Jim the Realtor" and knocks the air out of calls for more government support to a housing market that is returning to balance after nearly a decade of hyperinflation:

"The mainstream media is addicted to spewing the most negative spin on everything that happens," [San Diego Realtor Jim Klinge] said.

Here's Klinge's take: The bubble may have burst, but sellers and banks are acting like it's 2006.

"There's no shortage of buyers today," he said. But selling a home in 2010 means facing facts: The first time buyer's tax credit ($8,000) and the repeat home buyers tax credit ($6,500), which were much touted by the White House, and the hair-pulling perpetuated by easily shocked reporters, are simply signs that the country hasn't adjusted to the post-bubble reality. America's homes were never actually worth what easy credit and rabid consumerism led us to believe.

"Anybody who puts their house on the market today, for 5-10% less than other people are putting their home for, they're going to find a buyer," Klinge said. "Most sellers are 10-20% above where they should be."

Includes my argument that—if you're going to spend the public's money to solve this "crisis," which you should not do—a good foreclosure is a consummation devoutly to be subsidized by the federal government.

NEXT: "Professional Courtesy" May Help Indy Cop Escape Hard Time

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  1. Tough love.
    Crap town houses in my neighborhood at the height of the bubble were 300K (one or two went to 350K)
    I would be damn lucky to unload my end unit (with fireplace! bedbugs gratis) for 200K.
    But if you want a market, and resources allocated efficiently and effectively, houses have to be in line with average real incomes.
    Not letting house prices fall is doing more to stall the economic recovery than anything else.

    1. houses have to be in line with average real incomes.

      All we have to do is make the minimum wage $25 an hour and we’re there. Anyone taking less than $25 an hour is then working illegally and therefore their property will be forfeited and children taken away.

      1. If inflation hits, you may get your wish.

    2. Not letting house prices fall is doing more to stall the economic recovery than anything else.

      But that medicine tastes yucky.

  2. Ultimately, things are worth what they are worth and attempts to short-circuit that mechanism is bound to fail. Did not the collapse of the Soviet Union get this through to people?

  3. What? Lowering the price increases the demand? Its like there is some sort of natural law at work…

    My next door neighbor sold their house for $20k (about 15%) less in 2010 than what houses had sold for in 2008. But the house wasn’t on the market 6 weeks. Other houses in the neighborhood kept trying to hold out at $10k-15k more and still haven’t sold. It is very clear to me where the price-point is. If I have to sell to take a job, I’ll price it where it will sell and take whatever capital loss is involved. One of the benefits of taking out a traditional loan.

    1. Their house sold for $113k?
      ($20/0.15-$20=$113)

      1. Sold for $145k + a new roof where prices had been $165k. So, more like 12.5%

      2. The SO and I sold ours for $88k.

        1100 sq. ft, 3 bdrm, 2 bath, newish appliance, good condition.

        That represented about a $3k loss over four years of owning it. Not bad, as I think we came out ahead of renting (the rental market there sucked and my mortgage+taxes+insurance was less than I’d have to have paid for a 800 sq. ft. two bedroom apartment).

        The important thing was refusing to look in the part of town where the same property would have been $220k and we’d have taken a $30-40k loss.

      3. That’s not uncommon at all in most of the US

  4. Is that picture from something Hayao Miyazaki did?

    1. Not placing it at the moment myself, but it does have that vibe going for it.

    2. Yeah its from the moving castle one.

    3. Yes – “Howl’s Moving Castle”.

      My daughters love the hell out of that movie – they must have watched it 50 times in the last year alone.

      I liked “Spirited Away” better, myself. They also like “Nausicaa,” which I drive them crazy by calling Nausea, of course.

      1. awesome movie.

  5. I saw this back in 2007 when I was house shopping.

    Put two similar houses on the market, one priced reasonably, the other priced 20k too high. The first would get 10 offers within 24 hours of going on the market. The second would still be sitting there awaiting an offer 6 months later.

    1. Specific example occurred on my street in 2008: two houses, about the same square footage, but completely different layouts but should have priced out about the same.

      One was on the market for 210, the other for 175. The first lowered their offer a few times getting down to about 190, after a year finally rented it out. The other closed on a sale within 2 months.

  6. Home sellers, the government and the media need to learn their lessons from the Lone Biker of the Apocalypse: Price, it’s not what you say it is, it’s what the market will bear.

    1. I’d say we all need to learn our lesson from the Lone Biker of the Apocalypse: Make sure your grenades are carefully secured.

      1. Ah, but one could argue that the Biker’s downfall was in fact because his grenades were “carefully secured”. When H.I. “accidentally” pulled the pin, the Lone Biker clearly couldn’t unsecure himself from the offending grenade, resulting in his own personal suicide bombing. Had the grenade been easy to… never mind.

        1. Are you sure, I thought H.I. took the grenade off and shoved it down the Lone Biker’s shirt/vest.

          1. He only came away with the pin while flailing widely to get away. He was as surprised as TLBOTA to see he had the pin.

            1. Exactly. H.I., being an honorable man, ‘discovered’ the pin around his finger, and if you remember the scene accurately, (and correct me if I’m wrong) H.I. actually apologized to the Biker, knowing there was nothing he could do to help him.

              1. BEST MOVIE EVER!!!

              2. You are correct, Paul. H.I. was apologizing the whole time, even as he was crawling backwards to get away from the explosion.

  7. One of the most surprising things I’ve learned throughout the last couple of years is how little an effect wiping out trillions of dollars of wealth can have on an economy. It shows how illusory a lot of wealth is. Why little? Sure, it’s been a down economy, but wiping out trillions of dollars only results in a 4 point increase in unemployment? Frankly, I find that somewhat re-assuring.

    Of course, that my also mean that the US default on all of the fabulous debt won’t be as bad as I think it is. But I bet it’ll still be bad, way worse than today’s economy.

    1. Careful, this is the same view Paul Krugman takes on spending and debt. He’s convinced we can add trillions of debt and spending and it will have little downside effect on the economy.

      Plus, the powers that be disagree with you. When those trillions of debt were ‘wiped out’, the argument is that Goldman, AIG et al would have failed without government intervention, thus destabilizing the entire financial system, which would have trickled down to the workin’ man (UAW, teachers, librarians). Funny that how the left embraced ‘trickle-down’ economics…

      1. Wow, what a cursory understanding.

    2. THat is because the real economy is based on real things that really exist. If you loose trillions of value in things that were never really worth as much as they were priced for, it doesn’t really change anything on the macro level.

      1. I like that. Except that when you are underwater on your mortgage, the bank wants you to pay REAL money for that fake money lost.

        1. This.

          The only time a paper loss usually has no effect is when the transaction involves a single actor.

          Ted buys stock in Company A for $500. Over the next few months, the value of his stock rises to $100,000. Ted is greedy, he’s convinced it will go higher. He holds onto it thinking it’ll go to $250,000 or higher. Over the next week the value suddenly tanks and drops back to $500. Has Ted really been “damaged”?

          However, if Ted had sold his position when it was worth $100,000 and it tanks immediately after, the buyer is “damaged”.

          1. Unless of course Ted trades on margin. Margin call!

            1. Very true. Ted in my world trades OTC, all positions long, straight transactions. Respect.

          2. True, some people, even a lot of people, will be hurt because the dollars they owe are still real. The point I try to make is that the loss of trillions in value makes a smaller impact on the overall economy than one might expect because all of the real stuff that value is based on is still there. Contrast this with war, scarcity of an important resource or other “real” crises, where things of value actually disappear. This is why a recession is in many ways a good thing. The resources and capital that can’t be destroyed are all still there to be used in more efficient (or just different) ways by new people.

          3. I disagree.

            You sign a loan contract for a fixed rate loan for 30 years, in which you have to pay $x a month for a loan of $y.

            From this point on, the value of the house is completely irrelevant. You still have to pay $x a month if the house doubles in value or halves or is worthless or worth a hundred times what you paid.

            Now, it might make sense to quit paying and then rent (or buy, if he can get financing after a foreclosure) a cheaper place. But your monthly payment didn’t change because you took a paper loss or the value of the house.

    3. how little an effect wiping out trillions of dollars of wealth can have on an economy.

      Little?

      http://www.youtube.com/watch?v=QfBZnyJg0Bw&NR=1

      You have a funny definition of little.

  8. The Problem is that if you purchased a home in 2005 for $500k (put 20% down) and it is now worth $350k, it’s hard to take such a loss. Even when the owner is willing to loose all of his down payment and mortgage payments for 5 years, he would have to absorb the additional $50k+ commission.

    Some people don’t have that money. And, I’m sure people would agree to tack on the LOSS to another mortgage. However, banks won’t go along with this.

    The only thing that seems to work is to extort the bank into making some sort of a deal by appearing that one is going to strategically default. That is, once you’ve spent a year calling the bank (and not getting any response), to make a deal, STOP PAYING the mortgage, and they call you and now want to make deals.

    1. You are right. That sucks. But people who bought houses that they couldn’t really afford have no one but themselves to blame. When you buy a house, you need to look at what they payments will be and look at how much money you make and you make sure that you can comfortably make the payments. No one who doesn’t have a six figure income and good savings has any business buying a $500k house and if the did, fuck ’em, they deserve what they get.

      1. I agree with you. People that couldn’t afford this house in 2005 had no business purchasing this home. In fact, you had to have made $156k in order to afford this home after putting $100k down.

        But what’s happening a lot is people are either loosing their jobs or are being paid less. You can definitely argue that one should probably NEVER buy a home as one NEVER knows if/when they’ll loose their current income and have to settle for less.

        Once they are making less and/or can’t find employment, I can’t really blame them for walking away.

        The truth is that the majority (i know many people here will disagree with me) purchased a home in good faith…and are in trouble.

        1. If you’re underwater and you’re still employed and you have no plans on moving, you’re not in trouble.

          It may be financially astute to default (if you’re willing to have bad credit and give up your existing residence), but being underwater, in and of itself, does not mean that you’re in trouble.

          1. “…being underwater, in and of itself, does not mean that you’re in trouble.”

            Oh I agree. And, I think people ‘jump-the-gun’ too quickly.

            But, if you can rent the same thing for thousands less and are willing to deal with bad credit (which can make getting another job difficult these days), I don’t think one should walk away. However, people are, and people are advocating this as well.

            1. Agreed that if you’re living in the house and making enough $$, being underwater is a minor inconvenience.

              But according to FHFA’s statistics, being underwater correlates more highly with default than any other factor. Unemployment, illness and pay decreases together are not even close to being underwater as a predictor of default.

              1. A lot of those people are strategically defaulting; that is, they easily could afford the mortgage if they wanted to, but are willing to take the hit to their credit to rent a cheaper place and then eventually buy in five to seven years when their credit improves (or just are defaulting on an investment property, not their primary residence).

  9. If Tim Cananaugh’s IQ were a little higher–okay, a lot higher–he could have become a Jesuit instead of a stupid fucking right-wing libertarian hack. Dominus vobiscum, Tim.

    1. Go back to tonguing your dead mother’s rotting asshole, dipshit.

      1. Oh, that is so clever.

        1. Facts don’t have to clever, cuntshit.

        2. That Kinda is clever.

          1. No it fucking isn’t. Both remarks reflect the incoherence of low intelligence.

            1. But then “right wing libertarian hack” was such an intelligent assessment, Max. I’m sure you would like your mortgage subsidized with OPM? That’s “other peoples’ money” in case you missed it. Some of us would like to keep our money to pay our own mortgages and other obligations instead of yours. But we’re just “right wing libertarian hacks,” not politically correct “progressives,” so we don’t count, right Max? Max?

  10. I highly recommend Jim The Realtor’s website. Very amusing and well informed guy.

    http://www.bubbleinfo.com/

  11. Tim wears eye shadow. Is he gay?

    1. Who wants to know?

      1. Max is looking for a date. He really needs that “fill’er up feeling” on a Friday night.

    2. I wear eye shadow. No homo.

    3. I’m homo. No eye shadow. Go figure, Max.

      1. Sorry, didn’t need to tell you twice. Wanna date, Max?

    4. I’m homo. No eye shadow. Go figure, Max.

  12. The real estate market in the US has seen an inflation over the past ten years. But in this century, it has bounced back.

  13. change is the undying attribute of market,you never know what’s gonna happen at the next second.

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