October 3, 2004
A NATION OF OWNERS:
Affordable homes are a priority for Bush, Kerry (Lew Sichelman, October 3, 2004, LA Times)
[B]oth President George W. Bush and Sen. John F. Kerry have mentioned housing in campaign speeches, and both have included it in their platforms.In his acceptance speech at the Republican National Convention early last month, the president set a "new goal of creating 7 million new, affordable homes in the next decade." That's on top of his original, first-term objective of increasing the number of minority owners by 5.5 million by 2010.
His challenger didn't speak directly about housing at the Democratic conclave in August. But the party's doctrine includes a commitment to affordable housing as a means of "strengthening our cities" and "expanding the middle class."
To reach his new target, Bush will rely on the recently enacted American Dream Down Payment Act, which will pump $200 million a year to 40,000 low-income families who need help with down payments and closing costs.
He is also banking on proposed legislation to allow the Federal Housing Administration to back no-down-payment mortgages for first-time buyers.
The Department of Housing and Urban Development has said such a program will break even because borrowers will pay a slightly higher interest rate and a larger upfront insurance premium, but the Congressional Budget Office pegs the cost at $500 million over four years because it expects more defaults.
The measure has cleared the first hurdle, passing through the House Financial Services Committee on a voice vote. But because there seems to be little interest now to move forward, the bill isn't likely to be considered by the full House until next year.
To boost the supply of affordable housing, the president's budget also calls for a $2.5-billion tax credit over the next five years to home builders who produce affordable housing.
Pretty funny to compare how easily the author lists what the President is doing and then how he has to try and assemble what the Senator would do. Posted by Orrin Judd at October 3, 2004 10:38 AM
Kerry's new spot playing in Northern Nevada seems to stress how small business will be a real winner in a Kerry victory. Am I living in a fantasy world?
Posted by: ed at October 3, 2004 1:15 PMIt is difficult to discover what the Senator would do about anything. I've come to the conclusion there are only three things he would certainly do: 1) cut and run on Iraq and immediately withdraw, 2) give nuclear fuel to Iran to pacify the moo-llahs, and 3) cave in on North Korea by reverting to the failed policy of bilateral talks.
Posted by: jd watson at October 3, 2004 1:44 PMThe mullahs told him to stuff it.
Posted by: oj at October 3, 2004 1:57 PMYou can already get no-down loans.
It was a disaster here.
The market, acting as markets sometimes do, dipped.
Not much. About 15%.
Wiped out nearly 100% of the first-time, no-down buyers.
Posted by: Harry Eagar at October 3, 2004 2:09 PMHarry:
I suspect your market is a bit more volatile than average fly-over country.
Was your dip right after 9/11, perchance?
The areas with (long-term) downtrodden real estate markets are in PA, the industrial Midwest, and small textile towns in the South. But even in these places, the supply expands. Allentown, Bethlehem, and Easton are now almost part of the NYC suburbs (lots of North Jersey commuters are moving there). Pittsburgh is growing now that the mills are physically GONE (although the city is bankrupt).
Posted by: jim hamlen at October 3, 2004 3:26 PMHawaii has had housing bubbles. The most notable was when the Japanese economy went into the tank. No more Japanese purchasers, fewer tourists. We're "fly-into" rather than "fly-over".
Posted by: Steve at October 3, 2004 3:37 PMHarry:
What do you mean by "wiped out" ?
Being upside-down on a home loan ought not matter, as long as the payments are being made.
Posted by: Michael Herdegen at October 3, 2004 5:17 PMHarry:
Agree with Michael. Unless jobs are being lost in large numbers, there is no more need to lose a house than lose a painting because the art market is down.
Posted by: Peter B at October 3, 2004 8:42 PMHere's a bit of homeowner heresy. If one really wanted to make housing more affordable, scale down or remove the mortgage interest deduction. Take away the mom 'n apple pie sentimentality, and it's a subsidy that's most valuable to high-bracket taxpayers. Its present value is reflected in the purchase price of the property, and non-homeowners foot a disproportionate part of the bill.
Just a thought exercise.
Posted by: Dave Sheridan at October 4, 2004 4:29 AMDave:
While that would bring down the cost of homes slightly, it would also slightly lessen the number of people who could afford to buy homes.
It seems as though it would be worthwhile to eliminate the subsidy, and simply give people larger up-front grants to purchase homes with.
That way, the cost can be (potentially) controlled every year without tinkering with the tax code.
The Hawaii (specifically I mean Maui) housing market declined slightly following Gulf War I and the popping of the Japanese bubble.
What happened here was that although people were able to buy no-down places, they also had to depend on a second, part-time job or lots of OT to keep up the payments.
That's what they lost and so consequently lost their houses.
Even moving into a no-down house eats up quite a bit of savings, which are not easy to accumulate in a high COL area like this.
Your mileage may vary, but two things are generally applicacable in all areas:
1. The market does not deliver housing suitable for and affordable to about a third of wageearners.
2. It is almost impossible to build NEW housing affordable to them. In most parts of the country, 'affordable housing' is ex-middle class housing in decay.
In rapidly growing areas, it cannot decay fast enough to do the job.
Posted by: Harry Eagar at October 5, 2004 4:34 PM