George Will

Yes, in January single-family homes in major metropolitan areas lost 10.7 percent of their value from last January. To find such a large decline in a year you must peer back into the mists of prehistory, all the way back to ... the 1990s. Furthermore, the vast majority of homeowners will remain well ahead, even after the market corrects for housing inflation.

By one measure, between the beginning of 2000 and the middle of 2006, as the consumer price index was rising 21 percent, average housing prices rose 93 percent -- and much more in some markets (Miami 180 percent, Los Angeles 175 percent, Washington, D.C., 150 percent).

Not long ago there was broad agreement that too much of Americans' wealth was tied up in the nation's housing stock, and that the principal impediment to homeownership was not a scarcity of cheap mortgages but the prevalence of high housing prices. Hence deflation of housing prices would be desirable.

So far during this "crisis," the homeownership rate has declined just three-tenths of 1 percent since it peaked in 2004. At 67.8 percent, it remains higher than it was when President Bill Clinton left office.

Subprime mortgages are a small minority of mortgages, and only a minority of subprime borrowers are not making their payments. Casting this minority of a minority as victims of "predatory" lending fits the liberal narrative that most Americans are victims of this or that sinister elite or impersonal force, and are not competent to cope with life's complexities without government supervision.

The politics of this may, however, be more complex than the compassion chorus supposes. The 96 percent of mortgage borrowers who are fulfilling their commitments, often by scrimping, may be grumpy bystanders if many of the other 4 percent -- those who found the phrase "variable rate" impenetrably mysterious -- are eligible for ameliorations of their obligations.

What next? Adults still burdened with student loans have not yet announced their entitlement to relief, but as they watch this subprime drama, might.


George Will

George F. Will is a 1976 Pulitzer Prize winner whose columns are syndicated in more than 400 magazines and newspapers worldwide.
 
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