patrick.net

Also, given that well educated Americans have trouble managing their household budget and sensibly treating their homes as homes foremost...I'm not sure helping the poor to "own" homes is the greatest idea.

DS,

I can't confirm for the structure in her presentation, but I have come across a few affordable housing projects that look more or less the same as what she showed. Just judging from the appearance, you can hardly tell which one is an affordable housing project.

On average, US housing construction does look far more posh and swanky than Aussie projects targeting the same segment of the market, particularly when it comes to interior deco. Stockland, Mirvac etc are the quality setters down under, but when I compare their interior finish to the Toll Bros (equivalent in the US), Mirvac and Stockland still come a tad bit short in terms of fashion and finish. However, the Aussie designs are more environmental, more considerate and practical, just may not look that great on the outside. You know we yanks really care about the facade :-)

hmm, yeah, some of the public housing structures in NSW are extremely begrudging, but also very old -- the govt and others have steadily retreated from the whole idea of social housing in recent decades.

melbourne is a lot more into 'facadism' than just about anywhere in australia, which i think enhances the quality of life enormously, the desirability of green design issues notwithstanding...

Also, given that well educated Americans have trouble managing their household budget and sensibly treating their homes as homes foremost…I’m not sure helping the poor to “own” homes is the greatest idea.

astrid, i thought you were a self-proclaimed 'active progressive'. is an american progressive actually an anti-progressive anywhere else? this discussion is unpacking huge cans of worms about requiring 'responsible' market provision of loan products, the role of intervention and redistribution and so on which is absolutely Soc 101. 80% of people used to have an owner-occupier housing career, and public housing and renting as a long-term was marginal and residualised. that has now been turned on its head by 'market forces' in the last 20 years, and it was, to some extent, simply an accident. now no-one is allowed to have the security of their own equity and freehold title in retirement except by lottery. you seem to becoming more fatalistic and laissez-faire by the minute, which tends not to be the progressive's stance. if you advocate electing Democrats, perhaps you should be looking at their policy documents a little more closely and having a good ol' fashioned think.

you should consider lowering your target to low 6, once the marginal owners who bought at the top get flushed out, I think it will be a reasonable target, if you don’t want to wait for the absolute bottom.

Low 6 is a good target. :)

It seems to me that the move-up market starts at around low 900, so I thought the starter house goes from high 700 and up.

In Sunnyvale, 3 bedroom townhouses start at around low to mid 700. They are clearly targeted towards first-time homebuyers.

It is really scary that because of easy financing the starting price is pushed so high.

But really, I just can’t imagine couples making $200K as people looking for starter homes. Shouldn’t it be couples making $50-100K a year?

It is all relative. 400K will only buy an apartment-conversion nowadays. However, I definitely see that new 2/2 condos selling at this range again.

thanks for going out of your way to take a look at the presentation, OO.

i'm quite disgusted by the quality of architecture in sydney, btw. if an architect has even breathed on a project, real estate agents try to add $200 000 to the price, simply because most of what is here is really awful looking tat. you can get a really good looking place in melbourne for a lot less than an ordinary place in sydney. that has changed a little lately due to a style guide and edict by the state premier, but only in the last 5 years or so. even now, developers still build vast banks of identical apartments which are not human scale and made unattractive by sheer repetition and size -- and still charge drug money for them...

I’m not sure helping the poor to “own” homes is the greatest idea.

Astrid, think again... great idea for whom? :)

Most recent homebuyers have no business in homeownership. Somehow, it is considered too un-PC to break them this piece of news.

My progressivism is informed by a basic understanding of scarcity and human behavior. I would support higher minimum wages, free preventative healthcare, and free pre-school education first. Those would do much more to help the working poor and the lower middle class.

Ownership of housing has substantial downsides, especially for people who have little budgeting skills and are vulnerable to frequent layoffs and firings. Abundance of cheap, safe rental housing would do the working poor much more good than any misguided efforts to get the working poor into shoddy shitboxes.

I would support higher minimum wages, free preventative healthcare, and free pre-school education first. Those would do much more to help the working poor and the lower middle class.

The workforce also needs to be properly incentivized. This is why I favor no minimum wage and a flat tax. This way, people will be more inclined to better themselves. Education is more important than healthcare.

Abundance of cheap, safe rental housing would do the working poor much more good than any misguided efforts to get the working poor into shoddy shitboxes.

I agree. But existing homeowners will always lobby against low-income housing projects. They would love to see poor people getting toxic loans so that someone will be buying their shitboxes.

what you're really saying is that the US welfare system is so far behind the pack that they haven't even got healthcare and the minimum wage right. and that's quite right -- the US is always listed at the bottom of any taxonomy of affluent welfare states. and i think the reason for that becomes obvious when posters even here advocate making things even worse as a preferred policy direction.

i don't think the 'poor' and working class are by definition poor savers and poor budgeters, they just have less to bring to the labour market than others, and therefore remain trampled at the bottom of the heap. a whole broad package of reforms and restructuring would have to take place to make sure you didn't just sell them 'shoddy houses', especially since the cost of constructing even a good house is relatively low, and the rest is all about unfettered market speculation and greed, leaving the poor behind.

DS, I actually believe that the minimum wage system is detrimental to the poor.

Poor people are poor usually because circumstances are against them. This is difficult to change. We can only hope to make resources so adundant that everybody has enough. I think technology can help a bit here, but... hey, they are not making any more land. :)

As for buying real estate. I don’t even think about buying for the next 5 to 10 years. Renting is not only cheaper, but more economically efficient and has a more economically transparent structure.

Astrid, I used to think that way. However, as my first Saturn Return approaches, my desire to settle and put down roots intensifies. Do not underestimate heavenly objects. ;)

DS, I actually believe that the minimum wage system is detrimental to the poor.

Poor people are poor usually because circumstances are against them. This is difficult to change. We can only hope to make resources so adundant that everybody has enough.

hmm, it just ain't necessarily so in other countries that have higher minimum wages. australia's minimum wage is about the highest in the OECD at about $12/hr, but at least it ensures survival without having to turn to crime. that's been one of the mainstays of the social settlement and maintaining social order by not creating an underclass.

the 'circumstances' are human circumstances that can be changed, it's important not to lose sight of that -- it's not some abstract functioning of the elements like the wind and the rain. it's a totally arbitrary socially controlled and socially constructed system. i think one good way of making the poor less poor is to pay them more. and the visible result is a flattening of the wage structure and more equitable outcomes for all, with an overall increase in wellbeing and a reduction in crime, everything else being equal. otherwise you will end up with a brazil-like society of favelas and constant crime and danger where life is cheap, nasty, brutish and short. in a sea of surplus, abundance and affluence. it's a wilful failure to do the right thing.

DS,

I cannot open your Power Point, being on a Mac, but I know that Bridge builds some very nice, well designed housing. Often they use the "market rate" housing portion to subsidize the low income piece.

I went to the launch of this property:

http://www.bridgehousing.com/Default.aspx?DN=192,32,7,1,Documents

because my wife works for one of the underwriters. It is a really well put together place with lots of common space and a real sense of community. I went with my daughter, so I ended up hanging out with all the other parents, who were all renters there, not with the politicos who were there for the official launch. Oh well, schmoozing is my wife's job, not mine...

Any thoughts on the RE market in the Greater Seattle Area?

People, don't be too arrogant. We poor people do not need your help. If you help yourself succeed, you will make the economy strong and as a result benefit us poor. So instead of leading an idle life debating policies for the poor, why don't you go out and start small businesses and hire us poor people? We want to work, damn it. If I can afford a plane ticket to China, I would go there and compete with the Chinese. I want a job!!

DS,

The poor tend to be less educated and have fewer financial planning resources. And I think that makes them less suitable as home owners. A lot of people are not suited to be home owners; I, for one, am quite poor and not suited to home ownership.

Governor Conan,

But I don't think you'd enjoy competing with the Chinese. The work atmosphere there is positively 19th century. There's a reason why the US and Europe has created a social contract (though the one in the US is now in great disrepair) to avoid that kind of race to the bottom. You think finding a job and going to work is a drag in the US? It's much much worse in China.

Peter P,

I would recommend you go to Great Basin National Park and camp in one of the high campgrounds. You will find the most amazing night sky there. (much better than Bryce Canyon)

I, for one, am quite poor and not suited to home ownership.

really? you don't want to own a home anywhere? why are you blogging here then???

it just depends... if you expect to travel the world a lot, maybe there's no point, unless you really want to cement some equity and the rent will cover the mortgage payments. just depends whether you want control over your own place to drill and saw and renovate and not wait 6 weeks for the landlord not to repair something, etc

but what you pay in rent in all fairness could well be paying off a reasonably priced house or apartment, if that's what you mean -- there's no good reason housing can't be priced in line with rents, so as long as you could make the rent you could make the mortgage payment.

even in a partly social-ised world, the idea of cementing equity is fairly important, as owner-occupiers will generally fare better in retirement if they have paid the place off...

DS,

I'm mainly here for the company. I doubt most of the regularly are just here for fresh housing information.

The housing bubble is interesting to me as part of a much larger economic problem that could impact my life dramatically. Furthermore, I don't plan to be poor forever and I would be open to some bargain hunting in the future.

What I say about the poor is not passing moral judgment. Rather, most of them are simply not in a good position to buy houses. They don't have the economic cushion and control over jobs available to people in the middle class. They are constantly struggling to deal with day to day bills, they are very vulnerable to uncontrollable life changes.

As for houses as an enforced savings device. Wouldn't encouraging savings accounts be a better way? Or simply give the poor more money to save. Those are less complicated solutions than pull the poor into an already overpriced housing market with the false belief that housing will be their economic salvation, rather than an economic albatross for the unwary.

What I say about the poor is not passing moral judgment. Rather, most of them are simply not in a good position to buy houses. They don’t have the economic cushion and control over jobs available to people in the middle class. They are constantly struggling to deal with day to day bills, they are very vulnerable to uncontrollable life changes.

There are universal equity models that could be adopted that simply let you pay into a place, or gain 'credits', through your lifespan. You're operating very much in a free market mindset around the way jobs are handed out, housing is allocated, etc. Also with the way that welfare is allocated. I think 'the poor' need encouragements to participate more in the labour market without being penalised in this fashion. They are rights bearing humans and citizens also. There is also the question of whether the free wheeling labour market is really a good thing for people if they are constantly at risk of being laid off. The 'middle class' also is just an extension of the working class, and they don't have a whole lot of 'control' over their own job either, just more options to get another one if they lose their present one. I don't know if generalisations about 'the poor' are very helpful, though, given that students are 'the poor' while they're young, but not necessarily later, etc. And it is still possible to have a housing career on a low income in other parts of the US, where housing is actually very cheap by world standards.

As for houses as an enforced savings device. Wouldn’t encouraging savings accounts be a better way? Or simply give the poor more money to save.

Yes, but they will be paying rent separate to anything they will manage to save, which won't be much. Sure, give the poor more money, by all means -- I've certainly advocated a higher minimum wage and providing other forms of welfare -- but you're better off giving them access to owner-occupied housing if they desire it, and a great many people DO desire to own their own home. 'Giving the poor more money' is just as great a welfare intervention as anything else. But there might be more 'incentivisation' in offering them access to their own housing if they are able to participate in the workforce and make some sort of minimum payment each week or some other period. They would not be expected to 'compete in a housing market', you would be quarantining large numbers of houses as affordable housing with price controls, as per the Bridge Housing concept I've posted in above. And as I'm writing to the Minister of Planning at present...

DS,

I think you're missing my point, which was that a "housing career" is not a suitable solution for many people, and particularly the poor, given their very real present circumstances. Given those presently unforgiving circumstances, giving the poor more home buying assistance is like giving them more rope to hang themselves. Yes, house buying in this current economic situation, is economic suicide for the economically fragile.

Additionally, there are moral hazards aplenty with this kind of subsidy. My parents currently live in Montgomery County, MD, generally considered a model community for providing mixed income affordable housing solutions. However, I can tell you that those affordable housing gets abused by certain families, many scions of upper middle class Chinese families (who are on their first job and making below the county median income) get into the subsidized housing lottery and get below market price houses, and then rent the houses out and cash out at their first opportunity. I also know a woman who have a large hidden income and gets her relatives to buy subsidized homes, which she then controls and rent out.

There is no constitutional right to buy the home one lives in. Indeed, there is no constitutional right to lead a meaningful life. Successful society ought to promote economic and utility maximization as a whole, as the American welfare system and the American medicare system has demonstrated, indiscriminate subsidizing of any particularly group is unlikely to lead to optimal resource allocation.

Astrid,

'Optimal resource allocation' and 'utility maximisation' is a nonsense when people are buying luxury items like Dom Perignon champagne on a whim with huge excesses of disposable income while others can't feed their kids because they were laid off or became ill through no fault of their own. Further, you have no understanding of the concept of citizens or human rights, or ways of enhancing social capital in communities. I've pointed out that one of the prices you will pay for a dysfunctional, disharmonious society will be a cost in crime, and 'anomie'. Increases in crime from a dispirited, disenfranchised sector in itself will upset your 'social utility theory' since you will find they will not agree to being used like pawns in some utilitarian's game while breaking into houses, robbing stores and selling drugs to make money. I'd point to the French Revolution as a stark case of this anomie when organised. American race riots are another case in point. The union movement is another.

I'm not going to debate these issues any further, because you are not involved in government policy making, you are not aware of some of the key functions of responsible government, you apparently don't have a stake in desiring change in the housing market, and you want to debate social policy matters without any real training in the area or appreciation of the factors that will determine what really happens out there.

You've pointed to some situations that can occur when systems are not monitored properly, and housing authorities often rely on whistle blowers to report cases of fraud when they occur. Your moral responsibility would be to report those cases where you know of them. These are not arguments to disband any and all attempts at providing affordable housing for the citzenry where the market is clearly operating dysfunctionally.

I've pointed out that land valuation is arbitrary. In fact, the value of everything is arbitrary. However, with the advent of a housing boom where prices have doubled in real terms relative to wages in a very short space of time, we are clearly seeing people locked out of housing who would rather be in it -- low, lower-middle and middle income earners, not just 'marginalised' people with unstable earning patterns. And clearly, the possibility of a doubling in prices for no good reason points to speculation and exploitation by a class of would-be landlords or property flippers. These things are no good for people locked out of housing, and no good for the macro-economy, because it's unproductive and isn't going to last. These last points have been reiterated over and over on this site already by numerous regular posters.

Housing ownership has been demonstrated to increase social capital and community wellbeing. It will provide a nest-egg and security in retirement for many. Homeowners in studies have been shown to be happier than renters, more trusting of their neighbours, and so on.

While I have assembled a 'library' of many policy documents on this topic from the net and other sources, they're obviously not suitable for loading here. A few of them are on my blogspot (as attached to my name), but I need to design a new site to allow the convenient presentation of them. Even the Bridge Housing site has the following to say:

Housing in California, let alone affordable housing, continues to be a catastrophic issue: seven counties rank among the ten least affordable in the country. Construction and land costs here are among the highest nationwide, and are dramatically exacerbated by a market where population pressures far exceed the available housing stock. The combination of these factors has had a brutal effect on the state’s low- and moderate-income families and seniors. Today, the median price of a home in the Bay Area is over $540,000. In Southern California, average home prices are also high, averaging over $450,000 in San Diego and Irvine. Throughout the state, record-high housing prices are well beyond the means of working families. Despite these trends, homeownership—with its ability to revitalize whole communities—remains one of the most important asset-building strategies for low-income and minority households. BRIDGE is committed to furthering these social and financial benefits through the goals of our Homeownership Initiative.

Home Ownership

DS,

Governments are quite efficient for public goods like policing, national defense, public education, and healthcare. Even well planned public housing may work much better than private housing solutions. However, when you move beyond those things and get into making subjective judgments about what people want and need, inefficient behavior starts to appear. Of course, it's always a balancing act between doing too much and doing too little, but societies ought to resist the temptation to do too much, especially when the society is not homogenous and there's much disagreement about society's goals. Thus, while high level of social welfare has worked exceptionally well in Europe, OZ and Canada (all those complaints about Canadian healthcare notwithstanding), I think American society is less suitable for a similar level of public services.

Government subsidies is free money, the same way that the housing bubble is free money. Both incentivizes misbehavior.

Overall, I just think you don't really understand America at the ground level. Your ideas might make sense in OZ, but it sure as hell makes no sense in America. It's just pies in the sky that doesn't address much deeper economic problems. Following those suggestions is not only politically unfeasible, but will also lead to a myriad of unanticipated results. You can read up on the People's Commune for more examples.

I've mentioned this before, and I apologize for starting again, but your everything is valid approach to real world problems makes no sense in a world where humans have free will and our resources are finite.

absolutely, newsfreak -- I've always said here that it's about land speculation, where valuers split out the cost and value of construction from arbitrary land value in their valuations. How else could a place in CA be worth so much? (Or, more accurately perhaps, the value lies in having some sort of functioning residence on a block of land with an income or utility potential. There are reasons raw land is not always quite as valuable as the land under a zoned residential dwelling.)

It's true the Consitution drafted in 1780 or thereabouts says little about the right to own your own home. Societies have changed a little in 200 years. Further, there is nothing in the Constitution that says schooling should be subsidised for kids, that immunisations will be compulsory, that water will be fluoridated, or that milk will be available along with fresh food at the school canteen. Or that garbage will be collected, sewers, electricity and phone lines will be provided, and so on. However, all these things are held to be public goods in the public interest to make a more pleasant, cohesive society, or to give kids every opportunity, etc. The Constitution is most definitely not the be-all and end-all of the role of government, it's an initial framing document and charter of Federation, to be fleshed out in more detail by all the laws and policies of Federal, state and local government as deemed suitable and necessary for the benefit of the people.

In the spirit of this thread of patrick.net self-examination and renaissance (i.e. better forum software), there should well be a patrick.net Declaration of Housing that can be mostly agreed upon... (preferably not saying 'some are more equal than others')

astrid, on the ground, there's scarcely any differences in the underlying framework of the so-called anglo-american welfare states. the english speaking systems tend to copy and borrow from each other enormously, and thus have quite a lot of de facto harmonisation without fiat. they are almost all at the bottom of any proposed taxonomy of welfare states.

there are a few freakish differences, such as the really high incarceration rates in the US, an order of magnitude higher than any comparable country. healthcare has not been 'socialised' to anywhere near the extent of most other OECD countries.

in that spirit of agreement, in fact, house price setting has tended to remain in the open market in many countries as a convention, where many other things have been regulated in some way. i'm amazed in fact that it remains so given the opportunities for corruption in property deals and the disenfranchisement of so many in booms and busts. the legal arrangements are still quite feudal, and in fact stem from feudal understandings and arrangements.

when you think about it, just about every aspect of housing is strongly regulated by govt EXCEPT the price -- building codes and standards, land zoning and permitted uses, block sizes and subdivision, setbacks, appearance to the street, permitted design features, water, sewage and electricity connections, property taxes, council rates, allowable modifications to buildings, FSRs, maximum heights, etc, etc. pricing has conveniently been about the only thing left out of the basket. why is that, do you think?

on the question of 'what people want', i'm not telling them what they want, it's been found in studies. if someone could buy their own place and have control over it instead of renting, at the same price, all else being equal, which do you think they would choose? why else all this sturm und drung over housing prices in society?

here is a survey on trust, at least:

The 2002-03 Wellbeing and Security Survey's author Dr Philip Hughes said levels of trust had been falling across the community for several years.

Dr Hughes said the lowest levels of trust were found among those in public housing and the second lowest was among those renting privately.

"Those people who feel more vulnerable in society are more cautious, along with those people who feel more vulnerable and those people who have lower levels of health and lower levels of financial independence and education," he said.

It's a matter of trust: but we don't even like our neighbours

in closing, interestingly, many areas in both canada and the US have remained quite affordable compared to other countries which have experienced an unremitting boom. so there has been a good de facto social settlement there concerning housing for a long time, which is only now starting to be dismantled. and at least there are options to remain in your own country and still purchase affordably -- assuming you are mobile, are happy to leave extended family, move to a strange state, and can find a reasonable job there...

It is always about where that house is, where that land is.

location, location, location... ;)

not just speculation, but ascribed land value -- agreed....

Joe,

I'm glad you gave my idea some thought, I'm never completely sure if I'm just sprouting gibberish or actually saying something that makes sense. I've lived in cheap apartments all my life, usually in middle class communities where most kids had houses, so I know what you mean about feeling oppressed.

If it came down to being unhappy in a small LA apartment or being happy in a comfortable middle class house, I would certainly recommend the latter. I hope there's a potential third way solution with a nice rental.

I think a lot of the stigma of renting is going away, with many smart middle and upper middle class people doing it as an economically sane solution. SQT and Randy both have extremely successful kids, who don't seem to suffer any stigma as rental kids. I also think the stigma that you're talking about might be more obvious amongst the lower middle. I got most of my harassment amongst the economic backwaters of Oklahoma. Once my parents moved to the fairly prosperous Montgomery County, MD, it just became a non-issue.

I think the fact that your wife is there for your kids fulltime will do them much more good long term than giving them a McMansion. I really observe that with my parents' old neighbors in their upper middle class subdivision. The kids with nice, full time moms behaved beautifully and did well in school. The kids whose parents both worked and didn't closely supervise their kids ran wild.

As for the harassment issue, I agree that magnet schools or private schools might be the solution. I went to a magnet program in high school and I never got harassed about where I lived, how I was dressed, or my last name. I think the best solution to the problem of kids getting picked upon is to avoid it altogether. Getting bullied or bullying based on how much one's parent makes is idiotic.

There's not much you can do about those bitter bagholder parents. But if you want to send your kids to private school, it might not matter. These parents may soon be in no position to pay for private school.

i've got a post awating moderation, and it doesn't even have the word 'social-ism' in it :(

in the meantime, here's something that suggests home ownership might be broadly valued:

Last February the sirens howled in Hollywood as the LAPD rushed reinforcements to the 5600 block of La Mirada Avenue. While a police captain barked orders through a bullhorn, an angry crowd of 3000 people shouted back expletives. A passerby might have mistaken the confrontation for a major movie shoot, or perhaps the beginning of the next great L.A. riot.

In fact, as LAPD Captain Michael Downing later told the press: "You had some very desperate people who had a mob mentality. It was as if people were trying to get the last piece of bread."

The bread-riot allusion was apt, although the crowd was in fact clamoring for the last crumbs of affordable housing in a city where rents and mortgages have been soaring through the stratosphere. At stake were 56 unfinished apartments being built by a non-profit agency. The developers had expected a turnout of, at most, several hundred. When thousands of desperate applicants showed up instead, the scene quickly turned ugly and the police intervened.

A few weekends after this tense confrontation in Hollywood, another anxious mob -- this time composed of more affluent home-seekers -- queued up for hours for an opportunity to make outrageous bids on a single, run-down house with a cracked foundation in a nearby suburb renowned for its good schools. "The teeming crowd," wrote Los Angeles Times columnist Steve Lopez, "was no surprise given the latest evidence that California's public schools are dropout factories."

[more...]

ZNet | Economy | Riotous Real Estate

oh well, that's 2 posts awaiting moderation :(

must finish my letter ;)

DS,

Liberalizing home ownership is not good for most poor people, who are more likely to be economically marginal and more likely to face period unemployment.

As for cheaper land prices, I think we'll have to wait for the free market to make that correction. Given that California can't even end the miserable Prop 13, I think there will never be the political will to restrict land prices. Furthermore, while there are no constitutional support for government subsidies for the poor, there are a substantial body of law on when and what condition government can appropriate rights from individuals.

Finally, I just don't see why giving poor people homes at some cost to society is necessarily a good thing for society. Manhattan and SF both have a fairly low home owner percentage but are quite wealthy. There are pretty high home ownership rates in the middle portion of the US but there's not much innovation and wealth creation happening there.

DS,

BTW, I happen to think a society that goes too far in decadent and luxurious consumption is a sign of the end times. Not sure if there's much we can do about it though, other than burning it down and starting all over again. Maybe we can do better this time.

newsfreak Says:
One example would be the recent move by Warren Buffett to donate to the Gates Foundation—Buffett admitted that private monies can admit and correct mistakes faster than a government agancy when attempting to address the inequities of health, education, and poverty in the world.

that's very true -- govts are scared witless abot not being re-elected, so are very cautious, never want to be seen to be wrong, and employ a lot of spin doctors on high salaries as a result. they may even be proposing doing the 'right' thing, but fear a voter backlash. and they are constantly polling public opinion. a foundation has no such fears.

further, foundations are freer to operate across jurisdictions and national borders, whereas govts only want to keep their constituencies happy. hence bob geldof can do more than any one govt for world hunger. or bill gates and warren buffett.

As for cheaper land prices, I think we’ll have to wait for the free market to make that correction.

i tihnk it will correct somewhat. but govt owned lands can be more or less given as a gift to the people to build affordable housing on, kept low with price covenants and means tests -- that's one of my policy proposals. along with developer levies exacted on private sector developments.

DS,

DS, if they take up your suggestions, please tell them to study well from California and Oregon. There's a lot of pitfalls to government sponsored housing, and it'll be not to repeat the mistakes (incredibly difficult to correct mistakes, due to the vested interests once the process starts) Americans have already made.

Also keep in mind that of the presence of the "gold collar" people who work blue collar jobs but consume luxury goods. It's not just the rich who are hyper-consuming. A lot of working class and middle class families are also spending like there's no tomorrow, often taking out HELOCs to finance their lifestyle.

yes - rising interest rates, increased fuel prices, saturated housing market and price 'overshoot', economic uncertainty in general, widespread unemployment, general inflation -- will all reduce housing prices...

most of the above are occurring at present. i believe the housing boom can cause general inflation, so it is a little self-cooling that way, but it's painful, as people have to agitate for higher wages. the 'oil price shock' was not the people's fault...

DS,

From my own subjective view, the nicest thing would be the creation of nice, mix income public housing similar to those in Singapore. Nothing would be better than to turn people's attention towards things that could make a society better, like better health, education, and productivity. The housing bubble has been an orgy of greedy, fear, and keeping up with the Joneses. However, the political system and society in the US do not support it.

DS,

Au contaire, the oil shock is very much an American production. Unlike much of Western Europe and Japan, we as a collective have neglected the inevitable depletion of oil by living in big houses, driving big SUVs, and relying heavily on fossil fuel. There's also the war in Iraq.

However, how much are you Aussies hurting from oil prices? I assume the hurt is a lot more obvious in the US because our currency has devalued so much and we have been sucking on the teat of cheap oil in a much greater way than any other developed economy.

newsfreak,

I'm afraid I'm a bit vague with the phrasing, I meant the political system and society does not support public housing and government land grants to home owners (though BLM sure give out a lot of usage rights, but I guess it only applies to corporations).

DS,

Liberalizing home ownership is not good for most poor people, who are more likely to be economically marginal and more likely to face period unemployment.

hence the conception of a 'credit' system. look, poor people here just occupy cheap public housing on peppercorn rents for decades anyway, so it's the same outcome. the housing dept ended up selling a lot of their stock to the inhabitants because they looked after them better if they owned them themselves, for the same reason -- they value owning their own place. i know of multiple generations living in public housing.

basically, the state govt is your very tolerant mortgagee.

clearly, it's protected and subsidised ownership, we're not throwing them to the mercy of the banks with foreclosures, huge mortgages, etc. and i believe the same treatment should be extended to low and middle income earners. isn't that why you guys have Fannie Mae and Freddie Mac in the first place? I've read more policy words about assisting people into home ownership from US sources than anywhere...

the US, CA and OR are not the only places who have public housing and affordable housing initiatives -- it's worldwide...

DS,

That policy has "helped" so many people that the subsidy effect kicked in and pushed up the house prices. End result, the old owners, the realtor industry, and the mortgage brokers take away most of the tax payer's largess.

True public housing is a different matter, but so far your plan just sounds like another subsidy scheme that will push up the house prices and provide little long term relief for the poor.