President Obama’s housing speech in Arizona the other day is another indicator that the economy will continue to stagger along for at least another two years as we continue to bumble our way through the weakest recovery in American history.
While it’s true that some elements of the national economy are beginning to recover, the president plans to put a stop to that.
In his speech, Obama spoke about real estate development and ‘flipping’ house as a bad thing, and that people still need help getting a mortgage and retaining the house that they bought. Never mind that real estate development by renovating old houses provide quality affordable housing in places that badly need redevelopment (like Detroit), he is going to plod ahead with some sort of cockadoodle plan where government will come to the rescue.
He plans to make sure people who are in homes that they cannot afford, and stay in those Mcmansions they overbought too. Worse, he plans to do it without an act of Congress and at the taxpayers’ expense:
We should simplify overlapping regulations and cut red tape for responsible families who want to get a mortgage, but who keep getting rejected by banks. And we should give well-qualified Americans who lost their jobs during the crisis a fair chance to get a loan if they’ve worked hard to repair their credit.- President Obama, August 5, 2013
If people are getting rejected by banks to buy a home, it’s because they can’t afford it. The American Dream of buying your own home is not buying it with the taxpayers’ money, Mr. President. It’s earning your own way and working to achieve that dream through hard work and savings. It comes from acting responsibly with your earnings and buying a home with your own money. It’s not overextending yourself with the taxpayers’ dime and then expect government to pick up the tab when things go wrong- which they almost always do, when people buy more home than they can afford.
At what point did the American Dream become a government bailout? He is going to ossify the market into a state where the taxpayers buy your home for you and then it is the last home you ever buy because you are buried in debt both to the banks and government.
The increase in value in homes is what creates movement in the economy. Trade, transactions and market velocity and volatility is what government generates tax revenues from and individuals some form of income. We don’t increase the economy by sitting on money, but rather by investing and spending it.
The president’s policies in his speech yesterday would essentially calcify a stagnant housing market. Much like government, housing will cost a lot and rot under the weight of molasses like conditions.
Additionally he proposed that boatloads of illegal immigrants will improve neighborhoods and housing prices and conditions. An influx of low rent and low income residents will have the opposite effect as a rich man’s version of third world nations begin to set up shop in our neighborhoods. Renting will become a way of life as the nation divides itself into landlords and tenants—landlords who won’t improve properties and renters who come to this country that are grateful to live in conditions that 50 years ago would be unthinkable to most Americans.
The net result will be a nation of slumlords, government housing projects, and cities that look like Detroit.
The private sector knows how to make money. Let them do it Mr. President. They know how to make loans and develop housing if you will only let them do it, and the economy will be better for it.
The American Dream is your own home with a fine lawn and a picket fence, not a taxpayer subsidized shanty village.