The Homa Files

Ken’s Take: Yes, there is a silver lining in the decline in home prices.  For many responsible people, sky high home prices made ownership out of reach.  Now, maybe some of these folks will have a fair shot.

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Excerpted from RealClearPolitics.com, “Subsidizing Bad Decisions”,  Sowell, March 10, 2009

The current political stampede to stop mortgage foreclosures proceeds…  

What if the foreclosures are not stopped?

Will millions of homes just sit empty? Or will new people move into those homes, now selling for lower prices– prices perhaps more within the means of the new occupants?

The same politicians who have been talking about a need for “affordable housing” for years are now suddenly alarmed that home prices are falling. How can housing become more affordable unless prices fall?

The political meaning of “affordable housing” is housing that is made more affordable by politicians intervening to create government subsidies, rent control or other gimmicks for which politicians can take credit.

Affordable housing produced by market forces provides no benefit to politicians and has no attraction for them.

Study after study, not only here but in other countries, show that the most affordable housing is where there has been the least government interference with the market– contrary to rhetoric.

When new occupants of foreclosed housing find it more affordable, will the previous occupants all become homeless? Or are they more likely to move into homes or apartments that they can afford? They will of course be sadder– but perhaps wiser as well.

The old and trite phrase “sadder but wiser” is old and trite for the same reason that “saving for a rainy day” is old and trite. It reflects an all too common human experience.

Full column:
http://www.realclearpolitics.com/articles/2009/03/subsidizing_bad_decisions.html

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This entry was posted on March 18, 2009 at 7:30 am and is filed under Mortgage Crisis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.