Has the Obama Administration lost its mind? “Uncle Sam is landlord for at least 90 thousand homes that owners lost to foreclosure, and tens of thousands more in the pipeline as families are evicted and properties are appraised…Today the Federal Housing Finance Agency (FHFA) is asking for information from industry and the public on what might be done with the inventory currently held by mortgage giants Fannie Mae, Freddie Mac, and the Federal Housing Administration…One option: turning foreclosures held by the government into rental homes. That way, cheap foreclosures would not compete with other houses on the sales market. Local companies would probably be asked to manage any government rentals.”
Here’s the Republican commercial: “At one time this was a solid neighborhood of decent, law abiding families who took pride in the homes they owned. But then the federal government took over a bunch of houses and started renting them out to poor transient people from out of town. Now crime is up, there is trash in the street, property values are collapsing and people have started to flee. It’s this neighborhood today; it could be your neighborhood tomorrow if Socialist social engineer Barack Obama remains President.”
It isn’t just bad politics, because of the possibility deceptive commercials featuring race baiting and creating fear in a stressed out homeowner population. It’s bad policy. Just sell the houses at market, and let the market decide who lives there, and whether the houses are rented or owned.
And if housing prices fall, let the homeowners and the banks take their lumps and the buyers benefit. The buyers tend to be those in younger generations who have been and are being screwed in every other way. Why should the federal government continue to borrow money they will have to pay back just to try to keep their housing prices high? And then get blamed for whatever happens in a market it can’t really control?
Ben Jones of The Housing Bubble Blog saw this coming, and has been absolutely right. Christopher Thornberg of Beacon Economics is prepared to see clearly the results of all that money expended to ward off housing price falls. “Thornberg says he does not believe involvement by the federal government in the single-family home rental market will be any more successful than other federal interventions such as loan modification programs and homebuyer tax credits. ‘Just stop already,’ said Thornberg. "It is ridiculous. Everything they have done … has been pointless. The only thing that is going to eliminate the overhang (of foreclosures) is time.’"
Clearly this trial balloon is coming from Wall Street and the corporations, who are concerned that if housing prices continue to fall consumers won’t have money to spend and loan losses will continue to weaken banks. Well, consumers don’t have money to spend because if they aren’t among the rich their inflation-adjusted incomes have been falling, and their debts have been rising. They need to cut their spending back to what they can afford, and one thing they can spend less on is housing.
Paying less for housing is the only way younger generations can talk back some economic well-being from Generation Greed, and offset the higher taxes they will be forced to pay and the public services and benefits that are being taken away from them. Why is the federal goverment looking to keep propping up the asset values of those fortunate enough to own assets, even as many argue it can no longer afford to meet the basic needs of those who have the least?