Concho, you seem to think that the system is rigged so that investors (who lend money to borrowers so they can buy homes) do well out of housing. But investors:
a. Put up almost all the money to buy the house
b. Take on almost all the losses if the price declines
c. Get a return just a tiny amount above the rate on risk-free Treasuries. (Tiny compared to the possible losses.)
d. Take on all the losses if the loan repayments are devalued by inflation
Meanwhile borrowers:
1. Put down very little of the money
2. Can walk away if prices go down
3. Keep all the increases if home prices go up
4. Pay a lower rate than on any other loan they could get from any other fre-market source
5. Make out like bandits if inflation is high, because the loan repayments they have to make shrink in real terms
Help me understand how the system is rigged to help investors, and not the borrowers. As far as I can tell, our system of home financing is the biggest govt wealth redistribution system in the world, taking wealth from savers and giving it to people who borrow to buy homes, in truly mind-boggling amounts.
