Image by TheTruthAbout... via FlickrFor anyone who watch the news yesterday you will know that the world has come to an end as housing sales plummeted 27% in the last reporting period. Doom and gloom seem to be everywhere you look when it comes to this issue.
However, what did people expect when the government induced demand for housing over the last 15 months? Of course the federal government has been inducing demand in housing since FDR was in office in the mid-1930's but the most recent inducing caused a housing bubble that suddenly burst when the inducing went away.
To give a little history lesson, before the times of FDR, less than 2% of the population would finance a home purchase (the irony being is people today have a higher percentage of income to housing prices than back then). At the time to qualify for a mortgage you need to put 50% percent down and pay it off in less than 7 years.
With the advent of the FDR programs we started to see the 30 year mortgages come along and the induce demand created by opening home buying to people who could not previously buy a home (I will not get into the social-economic problems that this created as it was the beginning of our decline into a debt slaved society).
Then came the FHA guaranteed mortgages for people who could not qualify for a mortgage otherwise. The latest numbers I have seen showed that 50% of the mortgages now being created were FHA or VA guaranteed loans. In other words, 50% of the people buying homes really could not afford them without the government helping them and thus inducing demand.
The tax incentives over the last 15 months induced even more demand over what would have been normal.
So what does this have to do with transit?
It was this induced demand that is one of the many reasons that development occurred as it has over the last 75 years. If the government had not induced demand, how different would our cities look today?
2 comments:
Affordable, efficient transit will be key to our already choked freeways not becoming impassable.
Some of the other countries that subsidize people buying their own homes have high rates of people living in apartments and good transit. On the other hand, induced demand for real estate makes it difficult for people to move to find jobs, thus increasing the percentage of families in poverty.
FHA guaranteed homes have had a negative effect on things like transit because they have always heavily prioritized certain kinds of home ownership over others. (VA loans have usually been much less discriminatory.)
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