{"id":10203,"date":"2009-11-01T08:31:21","date_gmt":"2009-11-01T15:31:21","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=10203"},"modified":"2009-11-01T08:34:40","modified_gmt":"2009-11-01T15:34:40","slug":"the-net-effect-of-government-intrusions-in-the-real-estate-market-is-to-create-a-standing-wave-of-foreclosures-amid-steadily-declining-home-values","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/10203\/the-net-effect-of-government-intrusions-in-the-real-estate-market-is-to-create-a-standing-wave-of-foreclosures-amid-steadily-declining-home-values\/","title":{"rendered":"“The net effect of government intrusions in the real estate market is to create a standing wave of foreclosures amid steadily-declining home values”"},"content":{"rendered":"

This from my Arizona Republic<\/i> real estate column:<\/p>\n

As I write this, the entire real estate industry is on tenterhooks, waiting to see if the $8,000 first-time home-buyers tax credit is going to be extended.<\/p>\n

It’s not really a tax credit, it’s a taxpayer-funded subsidy, a “gift” extracted by force from everyone who does not buy a house under the program. The money taken from taxpayers — either now or later by deficit spending — is money that cannot be spent or invested elsewhere.<\/p>\n

And it’s not as though this were a zero-sum game. The actual marginal sales — the home sales that would not have happened without the subsidy — may have cost taxpayers from $40,000 to $75,000 each. And as huge as those numbers are, they ignore the interest cost of the borrowed money, the opportunity costs of mal-investment and the compound interest value of those opportunity costs.<\/p>\n

Government action cannot create wealth. At best, it moves wealth around. At worst, government destroys wealth by taking it away from the very people who have new ideas and new technologies to invest in.<\/p>\n

But as bad as this tax credit is, it’s only temporary. Someday it will end. The mortgage interest tax deduction — which almost no home-owners actually get — is forever. The government dominance of the secondary mortgage market — FannieMae, FreddieMac, GinnieMae, etc. — is forever.<\/p>\n

And here’s the real kick in the head, given all we’ve been through in the real estate market over the last eight years: The National Association of Realtors reports that 59% of all new home loans this year were underwritten by the Federal Housing Authority, the Veterans Administration or the U.S. Department of Agriculture.<\/p>\n

What this means is that a huge number of homes will have been sold this year with down-payments ranging from 3.5% to -5%. Six out of ten new mortgages are essentially nothing-down loans.<\/p>\n

The U.S. government wants to buy your vote by making home-ownership easy. But the net effect of government intrusions in the real estate market is to create a standing wave of foreclosures amid steadily-declining home values.<\/p>\n

 
Steal this book:<\/em><\/strong> I’ve written over 200 Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

This from my Arizona Republic real estate column: As I write this, the entire real estate industry is on tenterhooks, waiting to see if the $8,000 first-time home-buyers tax credit is going to be extended. It’s not really a tax credit, it’s a taxpayer-funded subsidy, a “gift” extracted by force from everyone who does not […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[251,29,6,5],"tags":[],"class_list":{"0":"post-10203","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-big-mother","7":"category-group-therapy","8":"category-marketing","9":"category-real-estate","11":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":14590,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/14590\/more-thrilling-real-estate-math-from-the-national-association-of-realtors-how-much-did-first-time-home-buyers-benefit-from-their-8000-tax-funded-subsidy-can-you-count-to-negative-15000\/","url_meta":{"origin":10203,"position":0},"title":"More thrilling real estate math from the National Association of Realtors: How much did first-time home-buyers benefit from their $8,000 tax-funded subsidy? Can you count to negative $15,000?","author":"Greg Swann","date":"May 11, 2011","format":false,"excerpt":"You read that right. On average, recipients of the $8,000 federal housing subsidy lost $15,000 on the homes they purchased using the subsidy as their incentive. From SmartMoney.com:The government's recent $8,000 cash incentive for first-time home buyers has proved even more costly for recipients than for taxpayers, according to data\u2026","rel":"","context":"In "Group Therapy"","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":579,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/579\/should-you-trust-the-numbers-you-read-dig-deeper\/","url_meta":{"origin":10203,"position":1},"title":"Should you trust the numbers you read? Dig deeper . . .","author":"Greg Swann","date":"October 27, 2006","format":false,"excerpt":"The Republic is all atwitter today because \"Prices of new homes slip by largest amount in nearly 36 years\". What's the real news: Nationwide (a non-existent real estate market), year-over-year median prices for new homes were down 9.7%. Not great, not awful, and not really news at all. We need\u2026","rel":"","context":"In "Marketing"","block_context":{"text":"Marketing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/marketing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":12341,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/12341\/first-time-home-buyers-tax-credit-the-morning-after-the-governments-gift-to-new-home-buyers-a-house-immediately-worth-8000-less-than-they-paid-for-it\/","url_meta":{"origin":10203,"position":2},"title":"First time home-buyers tax credit, the morning after: “The government’s ‘gift’ to new home-buyers? A house immediately worth $8,000 less than they paid for it.”","author":"Greg Swann","date":"June 22, 2010","format":false,"excerpt":"From the National Review Online:Things are looking worse on the housing front, with a severe drop-off in existing home sales following the expiration of the home-buyer tax credit. It's hard to overstate how stupid this policy was. The government marketed it as a measure to boost residential real-estate prices by\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":15293,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/15293\/hey-ron-phipps-i-say-the-national-association-of-realtors-is-a-rent-seeking-rotarian-socialist-conspiracy-against-the-american-consumer-can-you-offer-even-one-argument-to-refute-that-claim\/","url_meta":{"origin":10203,"position":3},"title":"Hey, Ron Phipps: I say the National Association of Realtors is a rent-seeking Rotarian Socialist conspiracy against the American consumer. Can you offer even one argument to refute that claim?","author":"Greg Swann","date":"November 9, 2011","format":false,"excerpt":"My friend and partner, the ever-more-Unchained Brian Brady, posted a Facebook link to a Wall Street Journal article on the current push by the National Association of Realtors for extended loan subsidies for the rich:To understand why 90% of U.S. mortgages are still underwritten by taxpayers, look no further than\u2026","rel":"","context":"In "Group Therapy"","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":47,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/47\/corporate-welfare-in-phoenix\/","url_meta":{"origin":10203,"position":4},"title":"Corporate welfare in Phoenix","author":"Odysseus","date":"January 25, 2006","format":false,"excerpt":"The Arizona Republic brings us another glowing puff piece on the beauty, the splendor, the wonder, the power and the glory of the forthcoming Trolley system:Funny thing about \"knowledge workers\": They don't like to drive. That's one of the reasons Thomas Gorny decided on a site along the future light-rail\u2026","rel":"","context":"In "General"","block_context":{"text":"General","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/general\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":14708,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/14708\/lay-down-with-dogs-and-you-wake-up-with-fleas-worse-if-you-decide-to-rape-the-taxpayers-via-nars-rapac-scam-you-get-plague\/","url_meta":{"origin":10203,"position":5},"title":"Lay down with dogs and you wake up with fleas? Worse. If you decide to rape the taxpayers via NAR’s RAPAC scam you get… plague!","author":"Greg Swann","date":"June 29, 2011","format":false,"excerpt":"From the Phoenix Realtor Forum, the monthly newsletter of the Phoenix Association of Realtors: Alas, the plague is a swarm of vampire-like locust Realtors. These are RAPAC's objectives, according to the article, with interstitial commentary by me in bold text. Mortgage Interest Deduction: NAR opposes any changes that would limit\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/10203","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=10203"}],"version-history":[{"count":1,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/10203\/revisions"}],"predecessor-version":[{"id":10204,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/10203\/revisions\/10204"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=10203"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=10203"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=10203"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}