The government is desperate to get people to buy houses, and will pay you $22,000 if you are willing to buy one in south Tucson: [Hat tip M.R.!]
Qualified home buyers can get a $20,000 subsidy – courtesy of the federal stimulus – if they take a home on the south side that helps reduce the glut of vacant, foreclosed properties in that part of Tucson.
Pima County has secured $22 million from the American Reinvestment and Recovery Act to pay for the neighborhood stabilization program.
“It’s sort of a dual goal: to assist people getting into homes as well as getting these homes off the market,” said Cris Yonsetto, director of the homeownership division at Family Housing Resources.
There’s already been significant demand for the program, she said. And there’s no shortage of homes available. “We’re not at a loss for applicants, it’s just gone gangbusters,” she said.
The program started in November, and before the end of the year Family Housing Resources had 11 home closings, Yonsetto said. Then came six more in January, and another 17 are in the pipeline, she said.
One of the leading causes of the housing bust was the government intervening in the housing market and promoting “home ownership”. While yes, I could quote George W. Bush in his efforts to promote home ownership, I’m going to use this quote from Bill Clinton, because it’s older. He said in 1995:
One of the great successes of the United States in this century has been the partnership forged by the National Government and the private sector to steadily expand the dream of home ownership to all Americans. In 1934, President Roosevelt created the Federal Housing Administration and made home ownership available to millions of Americans who couldn’t afford it before that.
. . .
Now we have begun to expand it again. Since 1993, nearly 2.8 million new households have joined the ranks of America’s homeowners, nearly twice as many as in the previous 2 years. But we have to do a lot better. The goal of this strategy, to boost home ownership to 67.5 percent by the year 2000, would take us to an all-time high, helping as many as 8 million American families across that threshold.
This is the new way home for the American middle class. We have got to raise incomes in this country. We have got to increase security for people who are doing the right thing, and we have got to make people believe that they can have some permanence and stability in their lives even as they deal with all the changing forces that are out there in this global economy.
We’ve discovered that overpaying for a home does not bring about “permanence and stability”. If anything, it has made homeownership less permanent and more unstable because any bad economic wind leads to foreclosure and loss.
In spite of that, government is still promoting homeownership at a cost to renters. M.R. directed me to this comment by Jacqueline O. on the Arizona Star article:
I don’t understand subsidizing homeownership. We make homes more available (subsidies and financing) for homeowners (about 2/3 of the population) while taxing renters twice (renters’ tax on top of the property taxes they pay through their rent). Arizona is one of only two states in the country allowing this discriminatory taxing and, believe me, Tucson will try again to impose this unjust tax. Then we give hefty mortgage tax deductions to homeowners. Why this bias for homeownership? I call it discrimination against the 1/3 who can’t afford a home. And based on recent history, those being assisted will not keep up the payments and be foreclosed upon–again. Who gains? Banks! Banks who are in hock for foreclosed homes no one can buy at the old inflated price.
Today if you cease to pay your mortgage, the chances are you will stay many months before being foreclosed on and evicted. This foreclosure is portrayed in the media as a tragedy. If rent is not paid however, likely as not you will be summarily evicted, no matter how valid your reason for not paying or how tragic your personal plight.
I am NOT advocating that landlords should be forced to subsidize renters that don’t pay. Property owners need to be able to control their property and make a living by filling their properties with paying tenants. I just don’t understand the double standard in the media though that does not consider the loss of a rental home by an unemployed renter as equal to the tragedy of losing a home to foreclosure. This double standard continues to artificially skew the housing market in favor of lenders. It artificially raises home prices and has the ironic effect of discouraging home ownership.
There is currently a massive number of homes on the market and not a lot of demand. By not tinkering with this, prices should fall until homeownership should be easier. Prices become low enough for people to afford them. Lower prices homes carry lower risk for lenders, allowing private lending back in the arena again.
In 1979 Iranian students took over the American embassy in Tehran. The media kept referring to perpetrators as “students”. The administration however asked them to refer to the perpetrators as “terrorists”, believing that the term “students” was too sympathetic, and the media complied.
Today we talk about “homeownership assistance” as if this assistance is to help individuals who want to own and/or keep a home. Are we not, however, really talking about assistance for lenders? Shouldn’t we be calling this assistance “lender assistance” and call a spade a spade? Shouldn’t we ask ourselves where the housing market would be today if government policies had not fueled the “homeownership” craze?