Barbara Kiviat, writer for Time Magazine, discusses the Obama housing summit and the current attempts to fix the housing market.
Hi, Brian, In my family we all believed in home ownership well before we came to the United States. We owned our home in Buenos Aires and a place in the country.I had the unfortunate experience of getting a no doc, very high interests loans (9.75% and 13%) in Atlanta, GA in the mid part of 2002. I have not yet recovered from having my condo foreclosed in November of 2005. At the time I bought my place I had never heard of either subprime loans or predatory lending. After July 2002, I knew only too well what those terms meant. I still believe in home ownership. I feel it is a good thing, but it would take a miracle for me to live in my own home again. Instead of having a society of more renters than owners, why doesn’t the government (or the Law) punish the real estate professionals who are not especially honest and who harm borrowers because of the big fat commission they’ll get? Why aren’t these real estate professionals made to compensate the borrowers for the harm they caused them? If there are renters, there are landlords. I would not want to see home ownership become the privilege of only a few. Eugenia Renskoff
Remember too, the bulk of subprime loans in trouble were written by un-regulated loan brokers, not banks & especially not banks subject to the Community Reinvestment Act.
The NGOs that work with CRA banks have not been implicated in the subprime crisis.
It was the banks supporting the unregulated loan brokers by creating bad incentives. See Bank of America, etc.
@ Barry (and Ben) - I agree that balance is key going forward. The problem is finding that balance between home ownership/building equity and renting is necessary for American prosperity, housing rights, and social cohesion now and into the future. Right now there is a singular fixation and promotion of one form of home ownership that takes a narrow view of housing in general.
I believe that any balance that comes to pass needs to take into account peoples' finances, living arrangements, and lifestyles, something that is not reflected in the marketplace (probably because the federal govt. along with American culture is trying to push people into home buying/mortgages)
What about other innovations? Could there be other ways to build equity? What about new terms for leasing condos or houses? Could there be other legal co-paying or sharing innovations that we haven't thought of?
Certainly this is a places where markets can go to work, but with govt. regulation to shield against redlining, unfair terms, etc. - starting with the assurance of stronger rights to those that do not own. Pipe dream I guess...
I listened to part of the show on the housing dilemma and two points came to mind:
We hear a lot about the failure of the plan to loosen mortgage standards to make home ownership possible for more Americans. Looking at this issue more closely, is it possible to see where in fact it was a beneficial change for some percentage of Americans and so perhaps the baby shouldn't be thrown out with the bathwater?
The second point connects with the first. Encouraging more rental housing can't help but remind me that this choice brings up a different set of problems, e.g., the complicated history and problems of subsidized housing.
Having lived in small towns, a medium-sized city and New York City, what is appropriate in one setting is not necessarily appropriate in another (as one of your callers mentioned).
RLewis from the bowery i think he only reads his facebook fans now
Ben, from Park Slope, has the clearest idea presented. "A reasonable balance between owning and renting makes sense.", he said. Going back to what I said previously, the model of two-family houses in denser neighborhoods, creates not only the equity of ownership but also the possibility of neighborhood stability.
Clearly, the government should be involved in planning and the private section involved with investment.
Taher knows who I'm talking about with regards to David Harvey - he suggested him a while back. Harvey is excellent. Another person that I'd love to hear is Saskia Sassen on the remaking of the global economies in the structures of "global cities." Check her out.
Folks I Just, turned off the radio, a couple of comments where taken down, they where not offensive, but FUNNY.
A reasonable balance between owning and renting makes sense. Sadly, we have been skewed WILDLY towards ownership for decades -- and that isn't just Freddie and Fannie.
Just a few years ago, there was WIDESPREAD AGREEMENT that the specious climb in real estate prices was a major cause of our economic collapse.
This is only partially due to mortgages. Prices are also inflated from the tax-deductibility of real estate interest. And then there is the ability to roll over capital gains to a new house, which encourages people to treat an owned home not as a family resource, but as an ever-growing virtual piggybank. And certain capital gains from housing are not taxed at all, which again inflates the prices. And local properties that are used as investments and rented out still benefit from all of the proposals aimed at live-in homeowners. And on and on and on.
There is just WAY TOO MUCH government subsidy of hosing prices to the benefit of realtors and those who "win the lottery" -- those who sold at the peak.
And the worst part is when the prices fall -- who loses this lottery? Not the homeowner who bet on eternally rising prices, but the entire American economy. We're all paying the losing price in this lottery, right here, right now.
Do not finance the real estate agents and lucky winners on the backs of the American taxpayers. Enough is enough. We should end all taxpayer subsidies of real estate over a ten year period. Yes prices will fall. Deeply. But this, not prices climbing, is the "price stabilization" we are seeking.
Brian: We have a tendency to piecemeal the problem of housing, etc., without looking at the difference between cities; the difference between rural and urban. The is a considerable difference between owning a farm (at the house on it...), living in the suburbs and, say, owning a co-op in Manhattan. The "American Dream" should not mean everyone owns a house; in poorer neighborhoods, two family houses might be a better model.
@amalgam -- Thanks for that CUNY name -- there are some outstanding people there (but they tend to be liberal, so that rules them out in the eyes of Time, NPR and others).
To RLewis from the bowery -- excellent point. But Brian Lehrer is only doing what journalists generally do -- turn to other journalists as if they were experts merely because they write/speak on the topic.
terrific comments on this topic today. too bad that Brian pays us no mind. so much for being interactive. i guess we have to wait for Leonard.
the guest ignores equity. if u rent u never get our money back if u buy u can sell and get that equity.
@ Hugh - Dean Baker is excellent. What I'm waiting for - and I'm not holding my breath - is to bring someone on that can speak to the peculiar geographic and cultural effects as economics are being applied...Someone like David Harvey who's down the road at CUNY.
agreed that homeownership is an (intentionally) HUGE burden on all middle class and other non-rich people. But , why did the housing bubble in the UK have larger proportions than ours? What was the mechanism? (remember Northern Rock?)
There is another way to look at Bush's "ownership society" language.
On one side of the conservative spectrum was the Bush "responsibility" contingent. Conservatism embraces people being "responsible for themselves." Ownership works with people being more responsible. (Liberals respond that differences in fortune, wealth influence the capacity to be responsible.)
To his credit, Bush truly believed this.
On the other side is a far more vile conservatism -- the conservatism of Newt Gingrich or Lloyd Blankfein. This conservatism does NOT want ownership except to the extent that it makes the poor and middle classes dependent on the rich.
Mainstream reporters like those at NPR or Time really cannot grasp the degree to which the US is now an oligarchy or plutarchy.
*Ownership* society? As if! More like the debtor society. Ownership was only on paper...really, it's the banks that own society. Like the caller said, it was all a myth, that we're all 'wealthy' and 'middle class'
Working Class does not necessarily mean Middle Class. This is a mistake many of us make and the history of the MIddle Class would explain the confusion.
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This obsession with home ownership is based on the centrality of property-based to the American system of governance, large spaces to build, and - as the guest suggested - a belief in Manifest Destiny and American exceptionalism.
This concept of "ownership" at all costs, regardless of economic wherewithal, is an American fallacy that needs to be reexamined.
Hugh does have a good point on renting, though. Not only does American culture push people towards buying housing property, but so too does the American govt., all to the detriment of renters. Renters have so few rights, which I again place at the feet of the American system of private property.
Mr Cam[sp?] got it right.
That's right, the ownership society is a Margaret Thatcher/Ronald Reagan/George Bush privatization idea.
The myth of home ownership predates Thatcherism. There was a great article about it in the journal n+1 sometime in the last few years.
In other countries, there is a thing called "regulation" and "enforcement of regulation". Two things largely absent in the US. Moreover, the general population in Europe and other civilized countries do not view their citizens as saps to be screwed for purposes of making money.
American greed has a long and disgraceful history, as Tocqueville saw.
Will Brian Lehrer have a liberal economist who actually _knows_ what he is talking about? Somebody like Dean Baker.
HughSansome. Right. To be a member of contemporary media you have to swallow the “free market” Kool Aide. Another 2008 is just around the corner, or we may be we have never left 2008.
No one addressing "RLewis from the bowery" so again:
Wasn't it Bush who declared the "Ownership Society"???
Economists (from liberal to conservative) are in growing agreement that the next crisis will come in 5 to 10 years (maybe even sooner) -- soon because NOTHING was done to provide a _disincentive_ to the creators of the current crisis (Goldman, Citigroup, AIG, etc) to doing exactly the same thing again.
As for the housing bubble, Fanny and Freddie are now being disproportionately vilified. They did not create the elaborate mortgage-based derivatives.
Goldman Sachs, Citigroup, AIG, BoA, etc., have been given _every_ reason to do the same all over again.
Pathetic. But predictable when the interests of the super-rich are given total priority of those of _everybody_ else. After all, it is the rich who make loans, not the poor and middle class (even with their savings accounts).
There is absolutely no free market in US housing. Absurd to suggest that there is.
I recommend economist Dean Baker's writing on this.
if i never again hear the words "American Dream" (or, for that matter, "Mafia"), i will not miss them.
"America is over-housed"! Tell that to a New Yorker!
I am continually amazed by the sheer lying regarding housing economics.
Economists *universally* recognize that people want to own -- for the simple reason that people do not want to be slaves to vicious, money-grubbing landlords. Landlords in New York at least, are an enormous, informal organized crime family.
Economists would say that "rental housing is an inferior good". When people have a choice, they choose to own. For good reason in a nation that systematically deprives renters. (Few if any tax deductions for renting, unlike owning and the mortgage deduction.)
This is banker talk for saying "We really want the housing bubble to stay inflated!"
Bush and Obama pumped in hundreds of billions, trillions, of our money to reinflate the bubble. That has not worked very well. Foreclosures race along. People lose jobs and homes.
So the bankers would now like to see the housing disappear. That is why we are now seeing foreclosed properties just left to decay. If you can't reinflate the bubble by inflating demand, then reinflate the bubble by deflating supply.
It is a revolting statement on the nature of US business — one that the New York Times, NPR, CNN and so on are abetting with miserably, viciously bad reporting on the housing bubble.
Wasn't it Pres' Bush who declared the "Ownership Society", and how did that effect where we are now?
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