In their concerted attempt to “keep Americans in their homes,” Clinton, Obama, and McCain have called for the federal government to spend billions of dollars to curtail foreclosures and shield Americans from the consequences of their own risky investment decisions. Makes you think the candidates are on your side.While Reason Magazine puts the blame on Clinton, Obama, and McCain, the real generals in the war on renters are Senator Christopher Dodd and Congressman Barney Frank.
Not if you’re a renter. Foreclosures boost the supply of housing at a faster than expected clip. With supply for potential buyers (i.e., renters) increasing, home prices stand to fall (albeit modestly) to less insane levels, particularly in overheated areas such as Southern California, the region I call home. That increasing supply of housing and those lower prices could be why a Zogby poll released in April showed that, despite the economy’s tailspin, most Americans think now is a good time to buy a home....
Lost in the rush to help troubled borrowers is an understanding of what this crisis isn’t: a situation in which “Americans are losing their homes.” More accurately, borrowers who can no longer afford their mortgage payments are becoming—gasp!—renters. “Americans are living in other people’s homes” doesn’t quite tug at the heartstrings the same way, which is part of the reason you’re not hearing about it.
Also lost in the flood of campaign promises is the housing bubble’s true crisis, which barely anyone in Washington cares to mention. In 2001 renters who wanted to buy a house in Los Angeles County could expect to spend about $200,000, roughly the area’s median home price at the time. By the peak of the housing bubble in 2007, the median price had shot up to about $550,000, which the California Association of Realtors estimated would easily take more than $100,000 in annual pre-tax income for a family to afford.
Wrap your civic-minded intellect around that one: more than $100,000 a year to afford a modest home. Candidates, there’s your crisis—and thankfully, the market is already taking care of it, through the correction of foreclosures and the resulting increase in the supply of available housing. All a President Clinton, Obama, or McCain would have to do is watch from the Oval Office as that great American dream of homeownership becomes more and more accessible to the likes of me. Unless, that is, the next president is against affordable housing.
Saturday, June 14, 2008
The War Against Renters
Reason Magazine defends renters from the politicians' attack on affordable homeownership.