December 27, 2005
Housing Costs – great read
Dan over at Searchlight Crusade saw my rant about housing costs, and has extended and elaborated my remarks quite eloquently. This is a truly impressive post on the subject, which might be expected from someone so involved with the real estate industry.
I get back home to my house and my dogs tomorrow, so I’m pretty excited. And for Christmas, my wife got me this, so I’m pretty excited!
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Brad, I went and read the entire article. He’s very knowledgable in this area. I just wonder what’s going to happen when the housing bubble bursts.
No mention of money, or the cost thereof. No mention of the tax subsidies, the FNMA subsidy, which drives unaffordability by causing people who can afford housing to buy more than they can afford.
Just pity the poor developer, who gets the blame for high housing prices.
Except I wasn’t blaming the developer. And neither were most people, escept those looking for straw men to knock down.
Dana,
Neither Dan nor I blamed developers. Nor did we think that blaming developers is really useful. Developers are just trying to make the most money they can given the climate that government provides. If anything, we are blaming the NIMBY voters who restrict zoning, and the local officials that assist them in doing so. We’re just saying that if you do everything in your power to restrict high-density housing, using legal force, you’re going to be restricting supply while demand grows. Hence: price increases.
You are correct to point out some of the practices taken by unscrupulous lenders (negative amortization loans, interest-only, etc) which makes money “too cheap” and drives up prices, as well as pointing out that federal interference through Fannie Mae and Freddie Mac do the same thing, driving up prices. And, of course the income tax write-off on interest also artificially drives up prices. Last, places like California (with Prop 13) have a situation where property taxes are capped, but then that cap gets built into the purchase price of homes. A more complete analysis would have discussed those sorts of things, but I think neither Dan nor I was heading too deep into that aspect.