alt Hacker NewsI agree there are political considerations, but we are talking about a scenario where the only damage done is that the buyer must continue to live in the home they purchased at the price they purchased it for, and where the recipient of government benefits is a household capable of purchasing a house, presumably at the height of the market. Is a tax dollar better spent placating grumpy homeowners who already have a place to live they can afford, or by more directly building more housing and infrastructure?
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It’s a valid point of view. That said, for most homeowners it is as simple as: My house is multiples More expensive than my next expensive asset. Loosing all the equity in my home will affect my lifestyle and financial future negatively, a lot. I will therefore continue to vote against whatever brings home values down.
There really isn’t an easy and elegant way out where you neither pay off the haves nor pitch the have nots majority against the haves.
The scenario to address is people who are forced to move (via e.g. layoffs, company relocations, industry collapse, etc) who are also suddenly saddled with a mortgage far higher than they can realistically payback while still moving on to whatever opportunity necessitated the move in the first place.
The first order consequence of treating housing as an investment vehicle is high prices, sure, but the second order consequence is that you dramatically increase the stakes when individual people buy any house whatsoever.
I would much rather give checks to every homeowner whose home value falls than to force even a single laid-off autoworker or whatever into bankruptcy (good luck buying a home after that) if they elect to move somewhere else for a new job and can't sell their house for enough to pay off their mortgage. If the consequence of a government policy to build more housing is that more people become homeless, then its failing.
> we are talking about a scenario where the only damage done is that the buyer must continue to live in the home they purchased at the price they purchased it for
In non-recourse states, you'd expect to see defaults as people leave the keys in the mail to reduce their housing costs by moving next door at the reduced price or rent. More broadly, people don't like seeing their wealth go down.
> Is a tax dollar better spent placating grumpy homeowners
If it gets you the reform, yes. The point is you don't get housing reform with grumpy homeowners barring a massive shift in voting patterns.
Also, let's keep scope in mind. You only need to bail anyout out if you reduce home prices. If you hold them constant in nominal terms, that shouldn't generate pushback. (If you hold them constant in real terms, people can continue feeling wealthier.)