Saturday, October 11, 2008

Home Ownership for Everyone? Obviously Not.

The American dream of home ownership has been overstated and misrepresented. If you have any remaining doubts about that, take one more look at the wreckage caused by the sub-prime and even the prime, mortgage crisis and tell me that it is an illusion. People are losing their homes to foreclosure at a rate not seen in decades, if ever. Many if not most, of those homes were lost by people who could not afford them in the first place. Driven to commit 30, 40, 50% of their net income to house payments by price inflation that turned out to be the work of the sugar fairy, these unfortunate individuals and families were put into an economic straitjacket, often by unscrupulous mortgage brokers. The saga of "liar's loans" where almost anyone could walk into a mortgage broker and get approved for a mortgage without the apparent or real ability to pay, is now old news. But the wreckage still remains and the pain of hitting the affordability ceiling hard still stings. For the millions of people who were led to the edge of the abyss by the "dream" and then pushed over,  we think it's time to remove home ownership from its place as America's best investment and view it instead as just one of several ways to provide shelter for your family.  More to come, stay tuned.

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