George Will

WASHINGTON -- Lewis Carroll, call your office. Or, better still, the author of "Alice's Adventures in Wonderland" should call Washington, where the government's determination to solve the housing "crisis" produced this lead paragraph in a recent New York Times story: "Federal agencies are intensifying a criminal investigation of the mortgage industry and focusing on whether some lenders turned a blind eye to inflated income figures provided by borrowers."

Perhaps some lenders who were lied to were culpably indifferent to dishonesty because they planned to sell to others mortgages that the lenders knew were risky. But the victimization narrative that is turning turbulence in the housing market into a morality tale involves borrowers victimized by "predatory" lenders. The narrative remains murky because there is scant information about the percentage of currently distressed borrowers who were untruthful about their incomes or net worth when talking to lenders.

One symptom of the "crisis" is that housing prices have fallen. How far is unclear. Estimates range from 3 percent to 13 percent. Questions arise.

Do young couples struggling to purchase their first homes concur with the sudden consensus that the decline in prices is a national misfortune? The Economist reports: "Monthly payments on a typical house with a 30-year mortgage and 20 percent downpayment were 18.5 percent of the median family's income in February, down from almost 26 percent at the peak -- and close to the historical average." By this measure of housing affordability, the "crisis" is welcome.

The housing perhaps-not-altogether-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. 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?

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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