Is there really a housing crisis?

Why is everything a crisis? Like the affordability crisis? The age of first home purchase has increased to 38. We were 22 when we bought our first house, a run down duplex. Dual incomes were the exception until 2nd wave feminism in the 70s when women were told to go to work to have value (and to pay more taxes). We were thrilled to have renters pay our mortgage! It needed a lot of sweat equity and a loan from my dad.

 
Young people today want much more. They marry later and have huge college loans--even their parents are still paying off loans! They want nice cars--and need 2 or 3. We didn't take trips, buy nice cars, go out to eat, or dress well. For a long time we were "house poor." I get this uneasy feeling that when the government steps in to "fix" housing, things get worse, like 2007-2008 subprime crisis, or building "affordable" neighborhoods (that aren't). We had run away consumerism and inflation--keeping up with the Jones. In America, you really can have it all--just not all at the same time.

This complex https://www.apartments.com/fox-and-hounds-columbus-oh/cvfs42e/ is about 50 years old. Based on inflation since 1967, it's less than the 2 bdrm 1 bath unit we rented in 1967 after we sold our house in Illinois and moved to Columbus . What is affordability? We had one income (because a wife's income wasn't factored in the housing costs in those days). The dollar had an average inflation rate of 4.00% per year between 1967 and today, producing a cumulative price increase of 869.99%, or our $140 rent would be like $1360 in 2025.

Overuse of the word CRISIS

What if media, politicians, academics and marketers couldn't use the word "crisis?"  It must be like the word “sale,” because it seems to work.

• "Air quality is quickly becoming a global health crisis, especially in highly urbanized areas."
• " Every year, Ohio’s drug crisis grows."
• "Obesity crisis: 2 billion people now overweight. . ."
• "We don’t have a “gun” crisis in America. We have a crisis of angry, young men."
• "Refugee education in crisis."
• "10 facts about Africa's education crisis."
• "The ocean plastic crisis."
• "Domestic violence crisis text line."
• "Crisis of the nones in church."
• "The American fashion industry is in crisis."
• "At a moment of architectural crisis, Trent university . . . "
• "The [water] crisis in Flint is a result of a failure at all levels of government. "
• "Democrats face identity crisis."
• "Are you ready for the financial crisis of 2019?"
• "Adolescent girls in crisis."
• "There is a gluten crisis hanging over the baking industry as several factors converge in a slow and insidious manner."
• "Crisis management plan for your wedding."
• "There's a global banana crisis."
• "Are we handling the bee crisis wrong?"
• "The coal crisis has hit Powder River Basin."
• "Facebook is facing an existential crisis"
• "The crisis of the Democrats is becoming more evident each week."
• "The border crisis is fracturing the Democrat party."

How to create a new housing crisis

The Community Reinvestment Act of 1977 (CRA) evolved to the mess that gave us lower standards for mortgages and the meltdown of 2007. Now Obama wants one of his own and is pushing loosened standards for credit and home ownership again. Now all we need is packaging the loans and selling them. What a concept.

http://pubcit.typepad.com/clpblog/2013/04/obama-administration-wants-to-loosen-home-loan-availability-for-people-with-weak-credit.html

http://www.bizjournals.com/albuquerque/blog/morning-edition/2013/04/obama-urges-banks-to-loosen-credit.html

Capitalism, Corporatism, Socialism and Fascism

"Capitalism is (or was) an “economic system in which capital was privately owned and traded; owners of capital got to judge how best to use it, and could draw on the foresight and creative ideas of entrepreneurs and innovative thinkers.” The main dynamic of the market system is the relationship between the producer and the consumer. Corporatism, by contrast, brings to the fore the role of the “managerial state,” in which the government takes on an increasingly larger task in telling producers what they should produce and consumers what they should consume. This can be done in many ways, some more implicit and others more aggressive. Corporatism is distinct from socialism, because under corporatism the means of production (capital) remain in private hands. But the private firms are not simply free to respond to market signals. Instead, under a corporatist structure, the government directs firms in the ways in which they should employ their resources, sometimes through moral suasion, but more often through regulation, tax policy, and legal directives. Fascism, which uses coercion, bullying, and demagoguery to control private firms, is an extreme form of corporatism."

From Corrupted Capitalism and the Housing Crisis by Jordan Ballor, Acton Commentary, Feb. 15, 2012

Self esteem and housing bubbles

If you were a child or a parent in the 1970s-1980s, you were caught up in the self-esteem bubble. Even Christians like James Dobson did well on this misguided movement with books, TV shows, government grants, workshops for teachers, special session for child psychologists, NIH grants, etc. I know I certainly bought into it. Even Seseme Street got into the act. The idea was that instead of deriving healthy self-esteem from accomplishments, children could become accomplished by artificially ratcheting up their self-esteem. Although that’s been disproven (very evil and narcissistic sociopaths as well as deprived, abused and homely people can have very high self esteem) the memory and movement lingers on in “fairness” and “everyone is a winner” education movements. Everyone gets a prize, everyone is a success--and even 5 years ago during the booming Bush economy supervisors were looking for ways to reward workers (besides a paycheck) by inflating titles and having gimmicky staff awards for those employees who‘d had their self-esteem artificially inflated by these 30 year old, disproven concepts.

And along came the housing bubble of the Bush years. Although the idea that housing changes people instead of the other way around didn’t originate in the GWB presidency (it was birthed during the Carter years), it certainly flourished . Brilliant, educated academicians looked around and saw that very often successful, educated, well off people owned their own homes. So the idea developed, and then caught on with the unions, construction trades, real estate, and city planning professions, that if the poor and lower class and less educated or immigrant peoples could live in nicer homes and have mortgages like those people living in the suburbs who also paid higher taxes to support better schools, streets, parks, police, etc., then gradually people with a completely different set of values, would want to mimic middle class values. The pride of home ownership would somehow transform them! They would want to sit down with teachers and plan IEPs for the kids, they would decide to get married, they would not leave cars sitting on rims in front of trash filled lawns, they would choose chocolate Labs instead of white Pit Bulls, crime rates would go down, and it would all be kum ba ya.

Banks, lobbyists, think tanks, politicians, and all construction trades and their unions, did very well. The poor didn’t change. With no skin in the game, and still with that pesky low self-esteem they just moved with their values and standards, just like an earlier generation had done with public housing (now torn down because yuppies want to live downtown).

But, just as with the self-esteem movement, the memory lingers on, and the government is still shelling out billions to rescue the poor through housing--even though we all know that it’s the industries surrounding housing that are being propped up and controlled by the government. People still need shelter; they don’t need big brother or even big church to manage their lives.

Here’s a myth that helped create our housing crisis

“Homeport Programs at Columbus Housing Partnership is a private, nonprofit organization founded in the belief that a decent and affordable home is the cornerstone of family life and a healthy community.”

1) When you see the word HOUSING linked with NONPROFIT, it means government grants fund it, or the government provides tax incentives to foundations, churches or private companies like Nationwide or Huntington to help fund it.

2) PARTNERSHIP means that rather than private developers bringing their skills and resources to the neighborhood, they are encouraged to “invest” in a corporation offering tax credits where the money will first be used by the CHP to pay its staff and office expenses before it selects the builders and unions that will “redevelop” poor neighborhoods, most of whom will be making political donations to the Democratic party or the Mayor or city councilmen.

3) The mortgage industry and the construction trades may be private non-governmental businesses, but they are the biggest beneficiaries of the government's experiment of putting low-income families in mortgages they can‘t possibly afford, rather than rental property they can afford until they can develop home ownership and budgeting skills, can learn a few home repairs, or save enough for a down payment and all the expenses that go along with ownership.

4) DECENT doesn’t mean cheap. Home Again, a Columbus rehabbing project of $25,000,000, in one year (2006) did 96 roof repairs costing nearly $1,500,000. That’s nearly $14,000 a piece in crumbling neighborhoods of small houses 70-80 years old with poor streets, utilities and public schools. After Hurricane Ike a damaged church in affluent Upper Arlington with a huge roof had it replaced (not repaired) for $5,200.

5) AFFORDABLE in government housing speak means money has been transferred from tax-payer abc to entitlement receiver xyz, but many in that chain are not poor--they are staffers in government backed programs and agencies (like HUD, USDA, HDAP, OHFA COHHIO) earning good salaries, with excellent benefits and job security, which is why the programs must be continuously expanded.

6) FAMILY LIFE may be a single mom with several children. Does she really need a mortgage to add to the burdens the government has already imposed on her and the children? Like limits on her income or savings if she is to qualify for health care or nutrition supplements. The housing money would be better spent on job training and moving the children to charter schools, or a small private van service to get her to a good supermarket outside her unsafe neighborhood (but with repaired roofs).

Dear Reader, do you think the households of Andrew Weiner or Arnold Schwarzenegger are “healthy?” What about their “communities” that are circling the wagons defending them?

A house is shelter. Period. It should not be turned into a government experiment in economics, morality or education, nor an evangelization vehicle for churches.

The story of the housing meltdown from an economist

Nobody caught on--not Greenspan, Bush, or Frank. And Barney Frank is still pushing more home ownership--without standards. But Bush will continue to be blamed because it happened on his watch. Video interview June 29, 2009



Sowell asserts in his book, "The Housing Boom and Bust," that politicians in Washington were trying to solve a problem that didn't exist.

"The problem that didn't exist was a national problem of unaffordable housing," Sowell explained. [And he's quite correct--housing was quite affordable in central Ohio.]

"The housing in particular areas, particularly coastal California and some other areas around the country, were just astronomically high. It was not uncommon for people to have to pay half of their family income just to put a roof over their head. So that was a very serious problem where it existed.

"But it existed in various coastal communities primarily and a couple of other places. Unfortunately, the elites whose strongholds are on the East and West Coasts don't seem to understand that there's a whole country in between, and in most of that country housing was quite affordable by all historical standards.

"So they set out to solve the problem by setting up a federal program to bring down the mortgage requirements, the 20 percent down payment and that sort of thing, and by forcing Fannie Mae and Freddie Mac to buy up those mortgages from the people who no longer had to meet the same requirements.

"The banks had no choice but to go along because the regulators controlled their fate. So the banks would simply sign up people, sell the mortgages to Fannie Mae and Freddie Mac. It now became Fannie Mae and Freddie Mac's problem. And that meant it became the taxpayers' problem." [quotes from Newsmax interview]