Common Sense For New Hampshire

In today’s @Issue section of the Asbury Park Press are four competing “solutions” to the problem of affordable housing.  As usual, the Press picks “experts” whose opinions are all just slight variations of the opinion of the Press’ editorial board.  All four call for more coercion to force the market to do things it wouldn’t do under the present conditions.  But just like with health care and education the reason why prices are so high is that the government is manipulating and distorting the market.

The federal government makes no secret of the fact that it is intentionally driving up real estate prices.  It apparently learned nothing from what happened in the last housing bubble and is desperately trying to inflate another one.  So they print money like crazy to maintain artificially low interest rates, they print money to buy tens of billions of mortgage-backed securities every month, they create rules that allow basically anyone who can fog a mirror to get a mortgage, and put the taxpayers on the hook for the near-certain defaults, and they propagandize like crazy how important it is to own your own house.  If we could get it into their heads that our prosperity is dependent on how productive we are and not how much we can pretend our houses are worth, housing prices would come back to earth and they could be afforded just like all of life’s other necessities when subject to real market prices.  Notice that we have no need for a council on affordable clothes or a council on affordable cell phones.  That is because thankfully (at least so far) in those industries the government has allowed the market to work.

BTW, high rates of home ownership isn’t really that good for the economy and the people anyway.  There’s lots of people in Michigan that would like to move south for the manufacturing jobs or west for the new energy sector jobs but they can’t because they can’t sell their houses.  And buying a house when interest rates are low is a mistake.  Better to buy when interest rates are high and house prices are low.  You can always refinance when interest rates fall, but if you paid too much for the house, you can never change that.