Should we help the poor pay off mortgages?

I think home ownership is foundational to self determination and success. Not to demeen those who prefer to rent, Im sure there are benefits of renting for a minority of lifestyles, but I think most people are better off owning a home (and owning the land that its on).

I think a program that subsidizes home ownership for the lower classes would greatly benefit the economy by stabilizing many poor peoples lives... and reducing the cost of housing for those who will buy in the future.

We currently have an overabundance of empty houses across the nation. Ostencibly, this is due to a lack of demand in the market. But I disagree. I think its more likely due to a manipulative agenda.

Nearly all of these houses are bank owned, and if the housing market was purely being driven by the laws of supplyand demand, the prices would drop until demand increased. But they're not. They continue to sit empty while people are stuck renting.

If I was evil, had lots of money and wanted more, I would buy a bunch of houses. I would jack the prices up on half of them so that no one could afford them and just let them sit. Then I would take out loans on their equity and buy rentals. Then I would price the rent just low enough that working folks could barely afford it, but high enough that the rent pays for the rentals, the loans, and more property to expand my scheme. Over a long enough period of time, if foljs werent paying much attention, I would own all the houses and could charge whatever I want. I would have a monopoly.

I think thats whats going on now. But theres a lot of different banks that own these houses, right? So it cant be a monopoly if those banks are competing with eachother. Well, theres this thing called Interlocking Directorate. The big banks are corporations run by boards of direcrors who own stock in the conpany. Many of the members of these companies own enough stocks in their 'conpetitors' companies to have a voice in company practice and policy. This is the legal loophole to price fixing and essentially makes all these corporations one giant cooperative conglomerate. And what better way to control (enslave) people than being everyones landlord?

I think giving The People greater means to get out of renting would stabilize our society in virtually every way and take a lot of power away from the banks.

I think a good starting point would be to set aside a portion of the budget to pay off peoples mortgages, starting at the bottom. Now, obviously, if this program were to be available to folks who purchase a home in the future, there would be alot of fraud and misuse from folks buying up the cheaper properties just to get the govt to pay for it, and the effects would be reversed. So this aid program could only apply to those who already have a mortgage. We'd start with those who owe the most on the least valuable properties with the least amount of income and work up from there, with a goal of ending the program either after a certain time period to assess its actual effects on the economy or after a certain value/debt/income ratio had been adequately reduced.

The biggest downside- this would likely devalue many of the homes that are already paid for... in the short term. But in the long term, I think the economic stability and growth would increase wages, revenues and decrease inflation so much that the decreased values of already paid for homes would not be a substantial setback, and indeed I believe the values would eventually go back up as more people with more money seek to upgrade their housing and put more demand in the market.

Thoughts?

 

Part of the reason we have so many empty houses across America is because older homes are undesirable to nitpicky entitled people. I live in an area with declining population and a booming construction industry. Not really a great combination for housing prices. In the plus side, the new homes will be fallen apart by the time they are paid for they are so shoddy. They will be a pile of strand board and engineered wood resting on top of $60 sq. foot marble counters.

 

Sounds like you're trying to re-invent the Financial Crisis of 2007. Don't we learn anything from history?

 

Owning a home is only for those that can afford it. There is no magic that happens when you own one and unless you have the income to maintain it, it can quickly become a liability. Replacing a furnace, central AC or roof costs many thousands of dollars and requires a person have a well-stocked bank account or good credit, both which take a good paying job. This idea that shoving people into homes they can barely afford needs to be examined closely and remember that the expense of a home goes well beyond the mortgage.

If you're going to give people money, why not just give it to them and let them make their own choices in the market? Subsidization, while it can have its merits tends to drive prices up as it increases demand on a captive audience.

I'm not specifically familiar with what you speak of, so what I'm about to say addresses your point more broadly. If a bank holds a home and is not selling it, chances are the home won't sell for what is owed on it. A sufficiently capitalized bank could maintain that holding and wait for property values to rise such that it can sell the house at some point in the future without taking a loss. As long as it holds the house on its books, it is an unrealized loss. Think of it like some stock you hold that drops in value relative to what you paid. Where is your incentive to sell? If you can afford to wait for the stock to come back up (assuming that it does), then you will not have had to realize that loss.

Banks take real money losses when they sell homes that aren't worth what was owed on them.

Ummmm...I hate to be the one to break this to you, but if you bought a bunch of houses, any equity you have in them is there because of the money you put into them. As far as "jacking up the prices so they just sit". Few thoughts. You don't have to jack up prices, you can just choose not to rent them.

Your last two paragraphs are genuinely one of the funniest things I've ever read in the area of economics and investing.

You're going to buy some houses, then your not going to rent them so now you have to pay all the mortgages (if you bought them in full, you'd still have to pay the taxes on all of them). You would do this so you had equity so you could borrow money and buy property to rent and them price them and price them "so only working people could afford"....

Tell me, how much home can a jobless person afford? LOL

Then you're going to use the surplus you earn on the rentals to buy more homes and charge whatever you want.

If you can afford to purchase the first set of homes such that they had equity, why not just rent them? Why hold houses you earn no income on in order to buy more?

And the wealthy already purchase rentals and make money on them, this is nothing new.

However, you've touched on a really important point. If you look at wealth in the US, the bottom 80% of people today vs people in 1980 have lost 8.6% of the total income:



Thus, the wealthy are in turn purchasing more homes and renting them to those who can afford, and to your point, if you own enough homes in an area you can affect prices. So while your post is funny (I'm not laughing at you to insult you....) it makes a very good point, even if you've expressed it in an interesting way

Again, generally speaking, homes owned by banks are liabilities, not assets. Banks pay a price to hold dead weight as it affects their ability to lend and earn income from interest.

I like your energy, but you are focusing it in the wrong direction. Banks are the problem, income disparity is the problem.

Actually, this would have been a great idea in the aftermath of the housing crisis. If the government had used the trillions of dollars of deficit spending and transferred payments directly to banks to keep people in their homes, this would have shored up the financial system and prevented trillions of wealth transfer that occurred. Look at the table I posted above. Notice the HUGE drop in wealth in the bottom 80% and the increase in wealth for the top 81-99%?

There are lots of ways's the government could have softened the blow over time. It could have demanded that people repay some or all of the money people were given when they sold their home. It could have taken small payments over the next 10 years....or it could have left the money in the hands of homeowners to use in the economy. Whatever.

Disagree. The loss of homes that occurred post-2008 dragged down values for everyone as the supply of homes vastly outpaced the demand for them. By giving people the means to stay in their homes it keeps supply low and maintains value.

 

No. What are the poor doing with a mortgage anyway???

 

Most home repairs are simple, unskilled labor and can be accomplished by anyone willing to look up DIYs on youtube.

After the initial investment of putting money down to get into the house, owning a house is cheaper than renting a house. Landlords charge the cost of the mortgage and taxes, plus expected maintenance/repair costs and usually a little profit as well.

Subsidation to the poor always comes with intended limitations. We dont just buy alcohol, drugs, vacation money or sports cars for poor folks. We give them aid that in theory supports them getting OFF aid and hopefully producing enough to repay that aid down road upon acheiving greater 'success.' This is why I suggest helping them buy a house instead of just handing out cash.

I think the difference here is that I see the banks involved in a nefarious (but necessarily unprovable) conspiracy against mankind, and you see them as merely greedy and/or incompetent. Not a criticism, just a difference in perception. I think the banks (not all, but in general) are foregoing some immedite or financial gains for greater future gains in power, influence and monopoly, causing, from a market perspective, irrational behavior.

Are the losses that banks suffer on homes they sell for less than whats owed on them lower than the losses they suffer from having them sit empty for years, considering taxes, security and maintenance?

Yes, you can choose not to rent them, but the optics of buying all the houses and refusing to do anything with them would increase the perception of folks to see it as I do- an agenda of manufactured scarcity for manipulative purposes. Offering them for sale at rediculous prices allows folks to believe its just the result of greed or incompetence.

No, price them so working people can barely afford, so they continue to live there but never save enough to get out on their own and compete.

I think banks (in part) are causing the income disparity on purpose. People are easier to control when they are poor. Again, its not just about getting rich, its about making us poor. The elite already have more money than they can use. They could live in opulance for generations without getting richer off us. There is a bigger goal here than wealth accumulation. They want to rule us, so they must make us dependent and reliant. The banks are likely just being used as a tool for this by a few of their top controlling interests, but the (distant) end goal is our enslavement.

 

Incorrect.

Simply having a physical building (called a home) is not the key to success, the key to success is the discipline, determination and attitude that is required to reach the point of being able to buy and maintain a home. Its a "home" and the homeowner is proud of it because of the effort and sacrifice it took to get it.

A lot of people think that the end result is what causes success. The end result is the sign of success not the reason for the success.

 

This was tried.

The results saw the market collapse of '08.

Wanna own a home?

Scrimp, save, & be responsible, make at a minimum, a 10-15% down payment, on a property you can realistically afford.

 

Studies indicate that people who own a home are generally happier, families more stable, children have a more secure upbringing and people are generally more productive in life than those that rent.

Obviously, correlation =\= causation. Perhaps people who are happier, more stable and more productive are more likely to own a home... but even then its still because owning a home is desireable by the 'successful' for some reason.

But renting a home is still more expensive in the long run than buying (renting an apartment may be cheaper in the long run, but not by much) and substantially reduces total living costs after retirement.

The physical value of the house and property is not the value to which Im referring, but the psychological value of having a home that you can do whatever you want with and that you arent paying someone for permission to exist there is the value Im refering to that I think would promote greater stability and productivity in the lower class.

 

Yes yes, but we ran that experiment and it failed, ending in the financial crisis. Shouldn't we learn from our mistakes?

 

Absolutely. We can either stay off that horse forever... or we can get back on and try riding it a different way.

 

The positivities you list, all have a base in the fact that EARNING and SAVING, for decades perhaps, in order to get what you can REASONABLY afford, the emotional growth, experience, & self esteem boosting pride in accomplishment, only come through hard work, and dedication.


You don't get that, by lowering the bar & essentially giving away the store.... No better put, giving someone a store, telling them it's theirs, run it.... & they haven't any of the tools to do so.

 

Just as the housing market collapsing due in part, admittedly, to a very similar program as Im proposing, caused many 'hard working, dedicated' families to lose their accomplishment, many of the folks in the underclass are prevented from ever reaching there goal by other government/corporate debacles. The 'free market' solution of leaving people alone to be successful is a pipe dream as far as the immediate future is concerned. The current system can only be reversed slowly, and we have to use it as best we can in the meantime. Im not trying to propose a great solution, Im just trying to propose a solution thats better than the nation of dependent renters that the social engineers are trying to build.

Theres a lot of great points in this thread regarding the dangers and fallacies of my idea. Perhaps some alterations to it or counter-proposals as well?

 

I don't think your premise, that home ownership is the best decision, is correct. It's actually a dangerous assumption. Manipulating the market to make homeownership easy for the poor is ...irresponsible.
You need a decent savings in order to keep a home up. A common scenero for someone in poverty who somehow gets a house, would be a home that falls in disrepair, property taxes unpaid, with the owners abandoning the property going bankrupt. that's not a thing to wish on people.

Roofs, water tanks, and even needed repairs to water lines and plumbing cost a lot of money.

 

the law of supply and demand does not say supply, demand, and price must meet today. If an owner wants to wait until the price reaches a certain point he is free to do so. Do we have to sell our stocks today at today's market prices?

 

You really should visit some of the "projects" in Chicago, Detroit, and Indianapolis.

 

I gave you my alternatives.

Scrimp, save, work hard, & stay within your means when buying a house.

Simple really.

 

Sure, but unless we are talking about new homes, furnaces, water heaters, electrical and plumbing issues, rodent, and insect invasions and insulation issues (just to name a few) can easily exceed the average homeowners capacity to repair or fix. It's easy to buy too much home and find yourself unable to effect necessary repairs.

I'd say that generally, you are correct, but that assumes a lot. I won't get into the weeds because, despite what you might think, I appreciate what you are trying to argue, though I think it's a little more complicated than you're making it. For example, you have to live in a home for several years in an area of minimal application before owning cost less than renting.

Again, I appreciate what you want to accomplish, I just think that it's a bit more complicated then you're making it out to be.

Here's where we disagree. The problem isn't banks, but our cultural idea of what a bank's role is in society. Banks used to provide a necessary service. A service that was provided in the public interest.

Today, we don't see banking (I'm not talking about commercial banking, that's different) as a service, we see it as a product. Culturally we've we've forgotten what it was like before banks. We've forgotten how expensive it was to move money. We've forgotten that without banks commerce suffers. National efficiency and productivity suffer.

I guess that depends. Take my house for example. I live about an hour west of Washington DC. My house has appreciated about $50k in the two years since I purchased it. I've spent about $25k on renovations, thus the net gain was about $25k (if I were to guess if I had just repaired things I probably would have spent $5k). The taxes, on the other hand, are about $2500. Thus, in the anecdotal case of my house, appreciation would exceed the costs of taxes and repairs, but I concede that wouldn't happen everywhere, at least at the same rate.

There are few people with the resources to pull off what you are talking about and there are even fewer willing to take that much risk. I think there are easier ways to manipulate markets for easy profits than the scheme you're proposing.

Competition sets the price and as I said, there are few places where someone would have the resources to pull off what you're talking about and even fewer places where people couldn't simply look in nearby areas for homes that rent/ sell for less.

I disagree with the idea that there is the equivalent of a secret meeting where all the wealthy and influential people get together and discuss plans to subjugate the masses. I will agree that certain cultural and ideological mindsets are moving the nation in that direction. So I take your point, I really do, but I think the problems we see are the symptom of a failed cultural and ideological mindset. Having said that, I think there are elite elete few who have watched the social and cultural change of the last 30-40 years and now use media and so-called "think tanks" to promote ideas that forward their social, cultural and economic agenda.

I think some of the things you've discussed are part of a larger problem, however, I don't believe that the effects we're seeing in society are part of some devious plan set in motion by a few wealthy and/ or influential people.

 

Everybody owning their own home would be very bad for the housing industry in the face of long-term shifts in demographics.

 

"I think the problems we see are the symptom of a failed cultural and ideological mindset."

Why so afraid to tell us what the mindset is??

 

A few people who are stuck in a bad situation may benefit from a helping hand up, but just giving people a building (a home) is not the magic pill that will solve societies problems.

How did people get that home? They earned it, they put in the hard work and sacrifice it took to buy the home, it was not a gift. People willing to work hard and earn it have the attitude that results in happier more stable and secure families. Just giving people a building does not change their attitude.

 

Mostly the Objectivist mindset embraced in Libertarian ideology. However, in the Libertarians defense, at least they have a consistent cultural mindset. Today's Republicans have largely sold out their morals and ethics for power and wealth at any cost (including working with foreign interests (at worst) or taking advantage of the interest of foreign actions and then failing to do anything about it (at best). So if you (or anyone else) are a Libertarian, I disagree with you, but I at least respect you. Republicans, not so much these days.

 

I tend to agree if you are going to give someone something give them the means to purchase their own home through their own accomplishments. Give them education, healthcare, help them with daycare, food, drug addiction programs, increased mobility for the disabled....Remove impediments to self-help.

 

You clean forgot to say what you have against liberty, libertarians and the libertarian philosophy of our genius founders that built the greatest country in human history by far

 

It seems you are deeply confused Republicans and libertarians are very similar except libertarians are not involved in politics so don't have to compromise with the opposition that is equally powerful now do you understand