Now That’s an Affordable Housing Plan

“Excess generally causes reaction, and produces a change in the opposite direction, whether it be in the seasons, or in individuals, or in governments” – Plato

As a general rule of thumb, whatever the government claims it is attempting to do via this or that policy, it will accomplish the opposite. Consider a few, simple examples.

  • The government wants to make education affordable – and education costs have skyrocketed
  • The government wants to make health care more affordable – and health care costs have skyrocketed
  • The Bush housing policies were aimed at making home ownership a reality for more people – and housing became utterly unaffordable and left many people broke
  • The Lyndon Baines Johnson “Great Society” programs were supposed to end the need for welfare, but instead crippled generations and enslaved them to the dole
  • The list could go on for days …

It’s not just government though, plenty of other folks come up with ideas that will do exactly the opposite of what was intended. Or, more to the point, exactly the opposite of the stated intent. (It is important to remember that people quite often intend to do the opposite of what they claim, but they know they can’t get away with it so they wrap it in a lie.)

Out in California, they have been hit very hard by the housing collapse, among other ridiculous fiscal policies at the state level. In response to the difficulties, one David Benson of Sacramento is collecting signatures in hopes of getting a ballot initiative to make foreclosures unconstitutional. It’s a great plan.

This is a plan that I can support, sort of. It will actually make homes more affordable, by dramatically lowering the price. If foreclosures become illegal, only a fool would make a mortgage loan. With no lending, the demand for homes would plummet, taking prices with it. No worries, nobody would be underwater – they’d all just stop paying the mortgages (remember, foreclosures are illegal now). Lower prices … and I mean lower by 70%-80% … would make houses much more affordable. (Yes, I made those numbers up, feel free to do the math and come up with something better.)

So who benefits from this plan, and who suffers. Well, the beneficiaries are obvious – anybody who is upside down in a house is immediately gifted their house free and clear. Also benefiting are those who do not own houses. A significant drop in prices will make homes more affordable and will place serious downward pressure on rents.

The sufferers will be banks (not that they get any sympathy from me) who will lose their shirts. Further, folks who actually have equity in their houses (or, enough equity to exceed the 20%-30% house valuation they’ll be left with) will see their equity wiped out.

I don’t know if he’ll get the signatures necessary – but if he does it will be interesting to see how the vote plays out. Besides the interesting election politics it makes (seriously, will opponents campaign on behalf of the banks?), the question gets to the root of simple mob-rule politics. When one segment of the population figures out how to exploit another segment for their own benefit, they only need 50% plus one vote to make it happen. That is, unless individual rights are given “inertia” (e.g., you need a 2/3 majority in congress to revoke my freedom of religion).

Are there enough people who see a chance to take a house that doesn’t belong to them, simply because they can get the votes? Who knows. We may find out. (That said, the proposal is so illogical, I can’t see it ever getting passed.)

I say I can “get behind” the proposal mostly tongue-in-cheek. I would like to see an end to government policies that “subsidize” housing, which only serve to increase prices and make life difficult for those trying to break into the game. But removing freedom to make contracts (e.g., mortgages) and have them enforced is no way to go about it.

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