Sunday, June 15, 2008

Houses and old people

The degree of generational cluelessness in the housing debate never ceases to amaze me. So many people treat high house values as if they are an unambiguous good. However cheap housing means more people can own homes, young people can own homes sooner, and older people are only really hurt if they are downsizing or took out a loan they are unable to pay off.

The quote that brought me back to this subject:

"Unlike the Bush administration, Mr. Obama also supports aid to localities to help them buy up foreclosed properties — a proposal that the president wrongly portrays as a handout to lenders or speculators. Actually, it is a way to protect communities from a buildup of unsold homes, which pummels the value of surrounding homes."

From the looks of it I would say Bush is right here. The parts of the country with the highest foreclosure rates are where home speculators ran the most rampant. Many of them are sitting on homes with no good exit plan. While saying they deserve it is probably a bit harsh, I certainly am not going to lose any sleep over them. Any plan buying up these homes would most certainly bail out a great many of them. There is no way to argue that the plan wouldn't do as much for home speculators as for any other group.

Even worse is who gets hurt by this plan. The tax payers who own homes benefit from the plan. However those without homes only get more expensive housing to go with their higher taxes. Those smart, poor, or young enough to not get caught in the housing bubble at the top are now supposed to subsidize the gains of the older and better off? Even worse, the housing bubble is in Florida and California more than anywhere else. This means any federal government plan is also poor states subsidizing rich states.

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