Your claims... is, I believe, based on the tax advantages of homeownership.
actually, what i was referring to there was all the govt sponsored and quasi-governmental housing financing programs, things like FNM and FRE and so on which now totally support the housing market. if the govt were to withdraw housing financing and let the GSEs go BK as they rightly deserve to, we would soon see a huge housing market cr*sh the likes of which would make 2007-08 look like tiddlywinks.
the "tax advantages", i.e., mortgage interest deduction, are nothing compared to what the govt is doing on the financing side of things.
I still don't understand your argument at all
it is really simple: take away govt support for homeowners (and buyers), and the market collapses. probably 50% nationwide, which would put it around appropriate levels as private financing for homeownership should be priced around 10% for 30yrs, given the huge risks lenders take in lending to American consumers without the govt safety net.
people buy houses based on what they can pay per month. since the monthly mortgage payment is literally half what it should be (due to artificially low rates), removing the govt supports (both explicit and implied) will mean people's mortgage payments for the same amount of principal would double. of course, people can't afford to double the size of their payments, so the circle must be squared here by cutting the principal (i.e., housing prices) in half.
by contrast, the govt doesn't provide most renters with a check that covers half their rent. people have to pay the whole amount out of their own pocket (with after-tax dollars at that).
you make a point that the govt seems to indirectly support renters by giving various breaks to landlords, but if you took those breaks away, rents would be the same. why? because renters are already paying what they can afford! what would change, if the govt didn't give breaks to landlords? again: the circle would be squared here by reducing the principal value of their properties, to a point where it would still be worth people's while to become landlords. |
