It’s obvious that the so-called housing crisis has created really hardship among some, particularly those who took out loans on bad terms and then had their property values fall. Some of those people are clearly sympathetic, while others are much less so, such as those who knowingly took on big risks or lied about their financial situation to get a loan.
But it wasn’t so long ago that the media was talking about a crisis of another sort — a “housing affordability” crisis — since housing prices had climbed so high that many were priced out of the market.
As George Will writes, the decline in home prices is the solution to that crisis and the current alarm over the state of the housing prices is really a matter of perspective:
Do young couples struggling to purchase their first homes concur with the sudden consensus that the decline in prices is a national misfortune? The Economist reports: “Monthly payments on a typical house with a 30-year mortgage and 20 percent downpayment were 18.5 percent of the median family’s income in February, down from almost 26 percent at the peak — and close to the historical average.”
By this measure of housing affordability, the “crisis” is welcome.
The housing perhaps-not-entirely-a-crisis resembles, in one particular, the curious consensus about the global warming “crisis,” concerning which, the assumption is: Although Earth’s temperature has risen and fallen through many millennia, the temperature was exactly right when, in the 1960s, Al Gore became interested in the subject. Are we to assume that last year, when housing prices were, say, 10 percent higher than they are now, they were exactly right? If so, why is that so? Because the market had set those prices, therefore they were where they belonged? But if the market was the proper arbiter of value then, why is it not the proper arbiter now? Whatever happened to the belief, way back in 2007, that there was a housing “bubble”? Or to the more ancient consensus that, because of, among other things, the deductibility of mortgage interest payments from taxable income, too much American capital flows into the housing stock?
Government intervention — like the bailout bill currently underconsideration — by definition will help some at the expense of others. A sliver of homeowners currently in distress will certainly be better off, but the millions who prudently waited to buy, anticipating a decline in home values, are among the losers. They have reason to be angry, and if this website is any guide — www.angryrenter.com — many are.