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Saturday, June 25, 2016

Bush legacy: home ownership at a 48-year low

Every day, I miss having George W. Bush as president. He loved our country and believed in his heart in the good of man. Plus Bush was smart enough to play dumb. President Obama is a vain fool who blames all his woes on Bush.

In one area, Obama is right. Home ownership.

On December 16, 2003, signed into law a bill passed by a Republican Congress called the American Dream Downpayment Act of 2003.

It was a liberal piece of crap which helped lead to the economic collapse of 2008.

President Bush said at the signing, "Our government is supporting homeownership because it is good for America, it is good for our families, it is good for our economy. One of the biggest hurdles to homeownership is getting money for a down payment. This administration has recognized that, and so today I'm honored to be here to sign a law that will help many low-income buyers to overcome that hurdle, and to achieve an important part of the American Dream."

At the time, I told myself, rut-roh. The federal government once again was going to enter the marketplace to fix things to suit whatever was popular. There is a reason banks require a down payment. People who are not disciplined enough to set aside a certain amount of money each month toward a down payment are not going to be disciplined enough to make that mortgage payment.

This legislation gave 40,000 lucky home buyers $200 million -- or $5,000 each -- to buy a home. Of course that money went to the mortgage company or bank. This was an annual dole out. It was the stake tied to the ugly kid to get the dog to like him.

Rules were changed on closing costs, as well as the paperwork to make it easier and easier to take out a mortgage.

"The rate of homeownership in America now stands a record high of 68.4 percent. Yet there is room for improvement. The rate of homeownership amongst minorities is below 50 percent. And that's not right, and this country needs to do something about it," Bush said.

Enter the Ninjas -- people with no income, no jobs, and no assets who nevertheless got mortgages thanks to Bush, the Republicans, and the federal government.

The result 13 years later was spelled out by the Washington Examiner:
Home ownership is at a 48-year low, driven in part by a shocking pattern of foreclosure that put 9.4 million out of their homes during the recent recession, according to a Harvard survey.
In its "State of the Nation's Housing 2016," Harvard said that "the U.S. homeownership rate has tumbled to its lowest level in nearly a half-century."
Figures from the St. Louis Fed showed a homeownership rate of 63.5 percent. The last time it was lower was in 1967.
In summary, we were at a record high of 68.4 percent in 2003. After 13 years of federal aid, we hit a 48-year low of 63.5 percent.

Now there are many other
factors in that drop. The numbers coincide with the labor participation rate and instead of mortgage to buy a house, many middle-class people now take out mortgages for college.

But make no mistake, by making fundamental changes to the mortgage industry without fully understanding it -- undoubtedly at the behest of the industry -- Congress and the president helped reduce the number of Americans who own their own homes.

This American Nightmare is part of Bush's legacy and further proof that among the three great lies in life is "I'm from the government and I'm here to help."

Let that be a warning to Donald Ttump.

9 comments:

  1. Bush was wrong, but this was a bipartisan fiasco. Is there any doubt that Obama would have supported the legislation in 2003 had he been in office at the time - it was as you say a "liberal piece of crap"?

    Are the principles behind Bush's legislation drastically different from the principles behind the "Home Affordable Refinance Program"?

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  2. That's the moronic feeling that Republicans like to get where they say "we can give away stuff too." It plays big at the Washington cocktail parties.

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    1. A right and proper conservative leader should aim to be disliked, yet respected.

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  3. Home ownership makes good financial sense for some, no sense for others. For those with assured jobs, home ownership creates stronger ties to the community. For those whose future employment is uncertain, a house is more of an anchor and a liability. A homeowner who needs to move elsewhere to find a job may be tied down by his house, i.e., in one sense home ownership may contribute to unemployment. In a long depressed area (think West Virginia), where housing prices may have steadily fallen over time, an owner who needs to move elsewhere in the country to find employment may incur a huge loss of equity---a major part of his family's life savings---when he goes to sell his house before he can move. Prior to the 1990s, the historical average for home ownership hovered around 48%. There were sound financial reasons for that figure. The current home ownership rate of 64% tells me the housing market is still subject to a further downward correction, which will be substantial once the Federal Reserve is forced to restore interest rates to a more sensible level.

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  4. "It was the stake tied to the ugly kid to get the dog to like him." That would be a "steak".

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  5. Lots of presidents, Roosevelt, Reagan, Clinton and Bush 43 ( to name 4) favored more home ownership, but the straw that broke the camel's back was not Dubya's fault. The onslaught of the sub-prime mortgage crisis was accomplished by the repeal of the Glass-Steagall Act of 1933 during Bubba's administration. This broke the firewall between investment banks and stodgy commercial bankers thus permitting looser credit ratings and no-money down schemes.

    Lots of stuff to read out there, Don - take your time. I hope that this is not a Trump-initiated vendetta.

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  6. As the puppy-blending prof keeps saying, house-ownership is a marker of the middle class, and providing a marker to someone does NOT make them middle class.

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  7. Compassionate conservative = liberal

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  8. > It was the stake tied to the ugly kid to get the dog to like him.

    I think you meant "steak" not "stake".

    Bush43's support of government incentives to home-buyers seems like it was a foolish political move. The Clinton incentives were popular (free bread! free circuses! free lunches!) so when Bush's efforts to cut them failed, Bush tried a jui-jitsu move to turn a negative into a positive.

    But the end-result was a too-clever-by-half failure when they followed polls instead of principles.

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