George Will compares the housing "crisis" (his scare quotes) to another one of his famous pseudo crises:
The housing perhaps-not-entirely-a-crisis resembles, in one particular, the curious consensus about the global warming "crisis," concerning which, the assumption is: Although Earth's temperature has risen and fallen through many millennia, the temperature was exactly right when, in the 1960s, Al Gore became interested in the subject.
There is a big difference, someone ought to point out, between the "climate" and the "weather" or the "temperature" at any given year. Suggesting that these are the same–and then pointing out how silly global warming is–is just dumb. I'm not even sure if this would rise to the standard of the straw man. At least with the straw man you have to approximate someone's real argument in order to make the deception work.
Anyway, on the strength of this astounding misunderstanding, Will launches into an a priori, and rhetorical-question-driven, assault on the housing crisis. He writes:
Are we to assume that last year, when housing prices were, say, 10 percent higher than they are now, they were exactly right? If so, why is that so? Because the market had set those prices, therefore they were where they belonged? But if the market was the proper arbiter of value then, why is it not the proper arbiter now? Whatever happened to the belief, way back in 2007, that there was a housing "bubble"? Or to the more ancient consensus that, because of, among other things, the deductibility of mortgage interest payments from taxable income, too much American capital flows into the housing stock?
Where's the drooling dunce who holds the position Will ever so skillfully skewers (that's two alliterations) here? Nowhere I bet. People may be wrong about the nature of the housing issue–they may even exaggerate it in a bit of political hyperbole–but Will should do us a favor of describing someone's actual position rather than the a priori incoherence of a straw man's position.
The market is the proper arbiter of value. But that doesn’t mean that whatever the value is that the market has determined is desirable or good for people in general. The main problem with the housing crisis, as I understand it, is not that housing values have decreased (although that is a part of it) but that people can no longer afford to pay for housing, and so we see a dramatic rise in foreclosures and a decrease in new home mortgages. The market value has been determined by the market. However, it is unaffordable even at a decreased value for many Americans. Which, of course, leads to a rise in interest rates, which makes those who have mortgages have to pay more, and the mortgage then becomes unaffordable, which leads to a rise in foreclosures, etc. Whatever the cause of this housing non-crisis, and I’m sure Will has his theory, it cannot be denied that people are losing their homes at the worst rate since the Depression. That is a problem. Perhaps even a crisis. But if the market has spoken, then all is for the best, apparently. Don’t take my word for it. Here’s a reuters article:
“The total number of U.S. properties with foreclosure activity in April was the highest monthly total we’ve seen since we began issuing the report in January 2005,” James J. Saccacio, chief executive officer of RealtyTrac, said in a statement.
In March, home foreclosure filings had risen 5 percent from February.
The surge in foreclosures indicates an increasing number of homeowners are struggling to make mortgage payments amid the worst U.S. housing market downturn since the Great Depression.”
Owning a house used to be something that just happened and was expected of you in your mid to late twenties. In the 60’s a middle class worker could buy a house that matched his (not her) yearly income. My girlfriend’s father, a librarian, bought his first house, nothing special but not in a slum, for about his yearly income. My grandmother bought a house in 1963 on a waitress’s salary with two children and no husband. Now, this type of scenario is nearly impossible. Housing prices have skyrocketed and take up a larger percentage of one’s income per month to pay for. That housing prices are falling is unfortunate for those already invested in a home, however that is not the main problem. The “crisis” is that people can’t afford to pay for housing.
Sorry about my long post. This issue is of major concern for me, and I suspect for many of my generation who have to rent because we can’t afford anything our parents were able to afford.