This article is very negative. Depending on how soon this stuff happens, this could have some more severe downward pressure on prices:
1. Higher down payments
2. Big reduction in FHA
3. Higher mortgage insurance FHA
4. Higher (possibly much higher) rates across the board
…wow.[/quote]
From the above link:
“The administration’s long-delayed housing report, released Feb. 11, drew a mix of catcalls and mild applause. Apartment developers praised the report’s emphasis on expanding opportunities for people to rent their housing as opposed to the idea that homeownership is something for everybody.”
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This goes with what SDR mentioned above, also, but I disagree with this sentiment. True, nobody is “entitled” to own a home, but there is little doubt that, for many people, it has been the only way for them to move up in life (that’s assuming inflation is in the future, of course).
IMHO, we need to weigh the “rights” of landlords/investors to make a profit at the expense of poorer people vs. the “rights” of poorer *working* people to own a home. It’s my personal belief that our society is better served if we assist the working poor, and that includes helping them with home ownership.
The problem is that we’ve gone about doing this the wrong way, by guaranteeing loans that stretch their budgets, and by “partnering” with for-profit (sometimes, fly-by-night non-profit) lenders, developers and builders who are not interested in the well-being of poor people.
I’d like to see a program where the govt builds modest, but well-built houses, and then sells them directly to poor people with certain requirements: a sliding scale DTI ratio, where the poorer one is, the LOWER their DTI ratio can be (i.e., a family earning $30,000/yr can only allocate 20% of their gross income on total housing expenses; and a $50,000/yr income can only allocate 23% of their income to housing expenses, etc.). These people would also be expected to maintain their homes as part of the deal, and (very low cost) HOAs would be set up to ensure everyone abides by the agreement. I would also include the requirement that they must not have been on “welfare” in the past five years, and should have credit scores of 620, or better.
I think it’s dangerous to have the pendulum swing too wildly in any direction. We’re going from “everyone should own a home,” to “only rich people should own a home,” and I think that’s a tragic mistake.
edit: One more…this program should have a limited number of opportunities per year so that the market is not overwhelmed by either the supply or the demand that results from the program.
