Let’s put this housing “boom” we’ve all heard about in perspective.
Let’s look at it not just with Progressive-colored glasses, but also with the frank stare of Main Street watching a rodeo clown wearing a presidential mask.
Stop me if you heard this one before:
According to a report by Goldman Sachs all is not that rosy in real estate. The benefits of the housing recovery have been targeted to those who least likely need it.
I’m not just talking about the widely reported disparity in prices between high-end and low-end homes.
It goes much deeper than that.
Half of all home purchases today are being made with cash, accord to the analysis made by Goldman Sachs.
The report studied data from the census, the realtors' association and the bankers’ association. What it found is worrisome.
For every dollar of purchase price, only 44 cents in being financed compared with 67 cents before the crash.
While it shows that banks can weather a real estate downturn, as can homeowners with such high equity, it also shows that they have accomplished this feat at the expense of broader participation in the housing market.
Mortgage origination in the United States is only about a third of the size it was at the market peak. The $1.5 trillion mortgage market is now only $500 billion, according to Goldman Sachs.
That means that it’s highly likely that you, and you, and you can’t afford to buy a home no matter how good your credit is if you don’t have the prohibitive cash down payment.
With the median home price in the U.S. at $214,200, that means that the average buyer is putting down $119,952.
Is that the kind of money most people have either in cash or equity?
No, of course not. And only liberals would try to convince us that this is progress.
“The analysis estimates that around 20% of all homes sold before the housing crash were ‘all-cash’ sales (or around 30% of sales by dollar volume),” reports the Wall Street Journal. “But over the past seven years, the all-cash share of sales has more than doubled, increasing by more than 30 percentage points, according to economists Hui Shan, Marty Young and Charlie Himmelberg.”
So, as long as you have anywhere from all cash to half cash to buy a home, congratulations, you’re a homeowner.
The rest of us? Well, who really cares about the little people?
And liberals have problems with “trickle-down economics”?
At least when Reagan was president, the trickle you felt from on high was cash and cash equivalents.
The numbers from Goldman Sachs present the most compelling evidence yet that the bank reform measures known as Dodd-Frank and associated housing “reform” measures instituted by Obama’s consumer Gestapo have failed.
The whole Big State idea of homeownership, in fact, has failed.
Since the passage of Sarbanes-Oxley in 2002, stretching through this current administration, Washington has made a fine mess of what was once the cornerstone of American freedom and prosperity: the financial markets, including and especially, the financial markets that loan money for Main Street homes.
It’s not that these markets weren’t in need of reform or updated regulations.
Rather, it’s just that the type of makeover that the markets received has been both ineffective at solving the real problems and draconian in effect.
This is how bad it’s gotten: Oil prices-- something we all feel the effects of at the pump-- keep going up as a result of the world-wide monetary stimulus measures by federal reserve banks.
You get screwed.
Conversely, housing prices set record lows while interest rates were puny.
Again: You got screwed.
And you got screwed by the same design that keeps oil prices high.
How, you ask?
Because one of the benefits of a recession is that consumers are supposed to get a temporary reprieve from high prices, like in oil and housing and interest rates.
You got no reprieve as to gasoline because of Federal Reserve policy.
“The Federal Reserve could increase the risk that the U.S. economy suffers a damaging bout of deflation,” reports Reuters, “if it tapers its bond buying too aggressively, a senior central banker said on Wednesday.”
“Deflation” in this scenario is low, low prices for you, especially for gasoline.
Conversely, the two areas where you might have benefited—real estate and real estate financing—have been closed off to you, this time by federal-- as opposed to Fed--policies that make if difficult for banks to loan money without getting sued.
But the Fed is also implicated here. Why would banks take the trouble to loan money to you-- and risk federal investigation-- at a time when the Fed is providing gobs of money to the stock market, in effect, turning the equity markets into less risky transactions than housing?
Even regular, registered Democrats would agree that too many Obama policies like these have had the net effect of leaving the poor and the middle class way behind.
This is certainly true in housing and finance, where Obama mostly got his own way. Blame Bush certainly, but in real estate and real estate financing, the system work exactly as Obama & Co. planned it.
They have no one to blame but themselves.
Look, I don’t think all progressives are hypocrites. Only some of them are.
But when progressive policies work out hypocritically in practice, the difference between being dumb and being a hypocrite becomes only a theoretical reality.
And that theoretical reality contrasts nicely with the actual reality between a rodeo clown wearing a presidential mask and a president wearing a clown mask to the rodeo.
At least the rodeo clown can eventually take off his mask.