As it turns out, the subsidized housing industry is effectively failing to achieve much more than artificially stimulating nominal demand in the rental market, supplying upward pressure to real estate prices that are a function of those rents.
The core obstacle to affordable housing is the vicious cycle of increasingly unaffordable units encouraged by government-guaranteed loans and the Federal Reserve's loose monetary policy and artificially-low rates of interest which fuel speculation, combined with the regressive zoning laws, regulations and restrictions which oppose the expansion of supply. Sustainable growth in the housing stock follows substantive growth in household income. Otherwise it's purely speculative.
In the United States, real median household incomes are roughly 9% below their pre-dot-com-bubble peak, even when using the modest inflation figures of the Federal Reserve.
This intimates that the United States real estate market is being exercised as an illusory generator of false confidence, one that outstrips the productive capacities of those betting on its continued appreciation.
This type of wealth effect only inspires its beneficiaries to feel wealthy in the short run, failing to inspire the style of real investment that might engender infrastructural economic development to sustain these leveraged speculative practices.
Much like the bubble in student loans, the middle and lower classes would benefit most widely from government's complete departure from the business.
This means abolishing government-guaranteed loans and grants, dismantling government-sponsored enterprises operating in the secondary markets, reforming the tax code that offers advantages to these investments, and allowing a market rate of interest.
This would enable the prices of homes and tuition to fall to reachable, merited levels.
This would surely bring pain to those speculators, but that is merely the price for a return to sustainability.
The core obstacle to affordable housing is the vicious cycle of increasingly unaffordable units encouraged by government-guaranteed loans and the Federal Reserve's loose monetary policy and artificially-low rates of interest which fuel speculation, combined with the regressive zoning laws, regulations and restrictions which oppose the expansion of supply. Sustainable growth in the housing stock follows substantive growth in household income. Otherwise it's purely speculative.
In the United States, real median household incomes are roughly 9% below their pre-dot-com-bubble peak, even when using the modest inflation figures of the Federal Reserve.
This intimates that the United States real estate market is being exercised as an illusory generator of false confidence, one that outstrips the productive capacities of those betting on its continued appreciation.
This type of wealth effect only inspires its beneficiaries to feel wealthy in the short run, failing to inspire the style of real investment that might engender infrastructural economic development to sustain these leveraged speculative practices.
Much like the bubble in student loans, the middle and lower classes would benefit most widely from government's complete departure from the business.
This means abolishing government-guaranteed loans and grants, dismantling government-sponsored enterprises operating in the secondary markets, reforming the tax code that offers advantages to these investments, and allowing a market rate of interest.
This would enable the prices of homes and tuition to fall to reachable, merited levels.
This would surely bring pain to those speculators, but that is merely the price for a return to sustainability.
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