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I don't really get why it is worth encouraging, either. But not particularly against it.
A lot of these Depression-era programs were designed to make jobs for people as well. If home ownership was made easier, it would mean more jobs for construction workers.
Interesting and important series of articles this week at Strong Towns. They are focusing on suburban poverty.
Why does this matter? Several reason, but most important IMO:
When the central cities started emptying out starting in the 1960’s (i.e…”white flight”), the poor and disadvantaged were at least left behind to neighborhoods that had decent transit and some walkable amenities and housing/apartments that were built to last decades. It certainly wasn’t ideal, but those were the realities.
Fast forward to today. As the tread begins to reverse and people return to the cities, the poor will find themselves pushed out to the edges of metros to cheaply built housing with little or no amenities/services within walking distance and very poor transit options.
This is a bad situation…much worse than when the “flight” took place in the other direction. New blogs on this topic will be published all week. Here is a sampling:
Here the developers are buying up 4-10 properties and tearing them down and building cheap $500K condos. No better craftsmanship than McMansions. The cost of land is so high and the old properties themselves are not the great well built ones - rather they are more like shanty houses.
Unfortunately the people who sell their houses to the developers are like lottery winners. They suddenly get $500K for their land. They have no concept of investment. They go on a wild spending spree. They are also not able to get housing in the immediate suburbia and are hence buying houses far away in the boondocks. When that money runs out they will not only be poor but also have no transportation, nearby schools or even a safety net of social services since they are very scarce in these outlying suburbs.
Cheap for condos - I mean it both ways . It is cheaply built. And it is a bit cheaper because it is a few blocks from the center of town. The true inner center of city condos go for $750K to 1 million.
I do know of a few people whose houses were sold and got big money and one went 25+ miles out in the edge of Greenville county to buy a house. And he got a brand new Cadillac too.
Yes, it's very clear ST does not think home ownership is worth the government encouraging it by subsidizing loans. I don't really get why not.
As structured post-FHA and, later, post-WW2, the various subsidies and policies thoroughly distorted the market for housing.
Quote:
Originally Posted by Katarina Witt
A lot of these Depression-era programs were designed to make jobs for people as well. If home ownership was made easier, it would mean more jobs for construction workers.
This is similar to the broken window fallacy. It's not the same, but the underlying idea is that activity for the sake of activity is not the same as growth. Sure, during the Depression this was a good thing, but now? Not so much.
As structured post-FHA and, later, post-WW2, the various subsidies and policies thoroughly distorted the market for housing.
This is similar to the broken window fallacy. It's not the same, but the underlying idea is that activity for the sake of activity is not the same as growth. Sure, during the Depression this was a good thing, but now? Not so much.
Write you congressperson. Don't shoot me, I'm just the messenger.
I read the article to be an author's whine that certain types of property were not eligible for FHA-insured loans while properties he personally detests were. His complaint is that discriminatory (as to property type) loan insurance policies changed the housing make-up for an area. But the article fails in so many ways because of his example. I didn't see it so much as being opposed to FHA but rather being opposed to properties he liked not being eligible for FHA-insured loans and that he would like to see the policy changed so as not to exclude the housing he liked (rather than getting rid of FHA-insured loans).
There is no question that loan availability will affect the type of housing that gets built. But extending the type of collateral which may be used to secure FHA-eligible loans is not going to create a sudden demand for two story downtown housing with a shop on the first floor and living quarters on the second. Non-FHA insured loan market (86% of the 2015 market) is still available. FHA is directed at insuring loans for residential housing, not retail businesses. There would not be a "DNA change" to downtown two story buildings with a shop below and housing on top even if FHA-eligibility were extended. Such housing has been largely weeded out of the genome and is insufficient in numbers to accommodate people anyway. Most people shopping for housing are employee drones looking for housing not housing plus retail business.
That type of housing is not available because getting financing became so difficult. We can't judge the demand today because quite frankly, no one could (or wants to) build it. Consequently (and a bit of a tangent) , we have fewer and fewer unique local small business owners that used to be able to boot-strap starting a business - shop at street-level, lived upstairs (or in back). Eventually he/she was able to build a house and then rent the upstairs for additional income. That vacuum that was created is now filled up with national chains of every size. The person that in the past was able to open up a deli in his hometown, is now unfortunately the manager of his neighborhood Subway. That hurts the local economy in many ways.
That type of housing is not available because getting financing became so difficult. We can't judge the demand today because quite frankly, no one could (or wants to) build it. Consequently (and a bit of a tangent) , we have fewer and fewer unique local small business owners that used to be able to boot-strap starting a business - shop at street-level, lived upstairs (or in back). Eventually he/she was able to build a house and then rent the upstairs for additional income. That vacuum is filled up with national chains of every size. The person that in the past was able to open up a deli in his hometown, is now unfortunately the manager of his neighborhood Subway. That hurts the local economy in many ways.
How do you know that financing the "apartment above the store" became so difficult? Do you have any data to back this up?
Have you ever heard the expression "correlation is not causation"?
I remember the 1950s, by the end of that decade I was 10 years old. We lived in a small-ish mill town. Very few business owners lived "above the store" in the downtown area. You have to have a lot more than a building where you can live above your business to open a deli.
If the purpose of the FHA was to increase home ownership, it makes perfect sense that such buildings were excluded. Small business owners are not the "average person".
Write you congressperson. Don't shoot me, I'm just the messenger.
Didn't think I was being mean that time. As far as I knew, I was only responding to a question and another statement.
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Do you have anything to back that up?
