What Was I Thinking?

Yesterday's Wall Street Journal contained an editorial that addressed the government's attempts to assist homeowners having trouble making their mortgage payments.

One of the conclusions was the attempts to assist will only prolong the inevitable, i.e., eventual foreclosure. So why not just foreclose, sell the property as owner-occupied or to investors for rentals? Obviously there are pros and cons to this discussion; however, I want to go in a different direction.

Although you won't find this in writing anywhere, the federal government has longed for the homeowner rate to reach 70%. An enviable goal (we've been hovering at 68%+ for the last two decades). The thought is that homeowners rather than tenants take better care of real property because they own it. Sounds logical to me.

The problem is that a free market economy and 70% home ownership aren't necessarily mutually compatible. If one espouses the "laissez-faire" approach, it's "hands off" by the government which means no government interference (price controls, building moratoriams, etc.). There will always be competing market forces and because of this some folks simply can't afford to purchase in this environment. So the question becomes, "how important is the 70% figure?" What's the difference between 68% and 70%? Does anyone really care, except the families who may never be able to buy?

We've gotten ourselves in a royal mess that is going to take years to get over. Notice that I said "get over" instead of "fix" because this can't be fixed. Lots of families are going to be ruined financially and emotionally before this is over. You would have thought we'd learned our lesson with the Savings & Loan debacle 27 years ago. A sad state of affairs but I guess not!