WSJ, 8/12/16, “The Housing Non-Crises”. an editorial.
The Census Bureau reported two weeks ago that home ownership peaked in 2004 at 69.2% and has continued to fall to a 51 year low. Many are lamenting about the continuing fall in that rate, the failure of the “American Dream.”
We know now that that rate was a bubble, caused by, government policies to pump ownership up (CRA, bank regulatory pressure, etc.) and markets fueling of the fire (unethical brokers, S&P ratings on bonds, investors wanting higher yields, etc.).
Research has shown that since 1890 the return on owning a home has been a cumulative zero, 0%, nada, nill, nothing! Bonds and stocks are much better methods to build wealth.
Yet, the housing industry is powerful ( millions of jobs), and politicians like to use their power to fuel growth through home interest tax deduction, low down payment rules, mortgage guarantees from Fannie and Freddie, etc.
With the “solution” put in place after the bust, mortgages are tough to get, the “recovery” is the worst in history so wages aren’t growing, and who is blamed, well, all “those” people who always try to keep the middle class down of course.
We don’t blame the government folks who know better than we do about how to fix the problem. Results matter, so far, the government is failing. Why is it bad to rent? Well, it isn’t. You aren’t tied to a house if you want to move. You don’t have lots of costs, like insurance, repairs, etc. If you want to grow your wealth invest in vehicles that work to grow the economy.
So, the solution. Grow the economy by reducing the cost to open businesses so they can hire people, create demand for employees which drives up wages. That is proven to work. Have competitive tax rates to the rest of the world so that investment continues to flow into the U.S. versus go elsewhere. Ensure global trade is fair, millions of jobs depend on global trade.
Work together versus portray those who disagree with you as evil, love them and work out a compromise.