[quote=Diego Mamani]I don’t think this is a win-win policy, as some have said. For one, it will create upward pressure for house prices, so that less and less Americans will be able to afford houses…..[/quote]
That’s right.
At the heart of this is yet another government effort to prevent home prices going down – and thereby becoming more affordable for Americans. All the other arguments are smoke being blown to distract from this very simple price boosting goal.
Would American society work better over the long term if homes were cheaper, or more expensive? Sure, if you already have a home, or you are part of the financial industry, you personally will “get yours” if home prices are kept high. But, ultimately, homes are a consumer good. Like any consumer good, we are better off if we can get more for less, not vice versa. Only if we assume that we can re-sell our home in the future for far more than we paid for it does that consumer good logic stumble. But assuming that home prices can continue to outpace incomes forever is assuming that a Ponzi scheme can continue forever. Home prices are a much higher multiple of the average young person’s pay than they were 40 years ago. We can’t sustain that home price pattern in the future, at least not with any fairness to the next generation of Americans.
