There was a well-written, interesting article in yesterday’s NY Times: http://www.nytimes.com/2010/09/06/business/economy/06housing.html. It discussed the many reasons why the disintegrating housing market may not get any further aid from the Feds, and for the most part, I had to agree. I was appalled at the $30 BILLION price tag for the recent tax credit, as from my perspective the buyers taking the credit were going to buy anyway (the sellers would have just needed to drop the price a bit more to make the deals, but they didn’t have to because the federal budget absorbed the body blows to the budget). And I am not a fan of passing a lot of the risks formerly borne by our too-big-to-fail institutions onto the taxpayers by having the FHA buy so many 5% down (or less) mortgages.
Since I don't think that we need more temporary band-aids on the market (we need mandated mortgage modifications and many jobs) I can’t disagree with this quote: “We have had enough artificial support and need to let the free market do its thing,” said the housing analyst Ivy Zelman.
But what followed in the story made me livid, as my head pounded with outrage: Michael L. Moskowitz, president of Equity Now, a direct mortgage lender that operates in New York and seven other states, also advocates letting the market fall. “Prices are still artificially high,” he said. “The government is discriminating against the renters who are able to buy at $200,000 but can’t at $250,000.”
Whoa: “the government” (funded by taxpayers, many of whom are homeowners) has been throwing its weight against renters (who also pay taxes)? “The government” has decided that those who own homes should drop their prices by another 20% and sell their residences to renters to remedy some past inequity? If that’s the case, then many homeowners won’t have any cash left over to buy a house, turning them into renters.
So why not cut out the hassles of having sellers convey to renters, never mind the aggravation of a tenant finding the right landlord? Why don’t we just remedy the unfairness seen by Mr. Moskowitz and ring a bell, mandating that each homeowner switch residences and obligations with a tenant? Think of all the favoritism this would eliminate, all the bias that would be remedied.
Wait…there’s a flaw in my simple plan to rectify bigotry against those who lease their residences. You see, Mr. Moskowitz won’t be happy unless sellers sell to buyers who take out mortgages. He doesn’t care about abolishing pro-owner prejudice: he cares about generating closing costs and charging interest on loans!
Make Mr. M. happy: if your house isn’t selling, drop the price by 20% and urge your buyer to take out a loan with his company. C’mon, America! Let’s urge our lawmakers to purge past intolerance of renters by legislating that every owner slash 1/5th off the current market value of the house and free the oppressed leasing class. And Congress, don’t forget a requirement that the previously tyrannized must take a mortgage out with a profit-making enterprise, so its profits will increase by at least 20%. Then, and only then, will this dark history of rental repression come to an end.