Make us your home page
Instagram

Buying a home may take more time, savings as federal subsidies fade away

What if 30-year, fixed-rate mortgages were a luxury rather than a foundation of our housing market?

What if mortgage interest was no longer deductible on federal income taxes?

What if Fannie Mae and Freddie Mac — federal creations gone wild (costing taxpayers $150 billion and counting) that offered "U.S." guarantees and backed the mortgage-backed securities market — slowly disappeared?

What if home buyers had to put down a "substantial" down payment when buying a house, perhaps as much as 20 percent of the home's value?

In the angry wake of the burst housing bubble and amid the hysteria over the federal deficit, these are just some of the possible changes that could sharply alter the housing market and shrink the percentage of Americans who own their homes.

Is this a good thing? Depends on your point of view. Certainly for Florida's still skidding housing market, such changes would hamper the already tepid recovery. But for the growing chorus that wants to shrink the role of the federal government and make the U.S. housing market more self-reliant, it is overdue.

Policy leaders in recent decades grew infatuated with delivering "the dream of home ownership" to anyone with a pulse standing in front of a For Sale sign. Rules relaxed (later growing more perverted) to make getting mortgages easy with no money down, no proof of a steady income and with no need to make regular monthly payments. How? Banks offered interest-only mortgages and tacked on any principal to the back end of the loan.

Who didn't drink housing's Kool-Aid? Home prices were only going higher. Buying a home was smart and padded your financial nest egg.

Then it was over. Home prices plummeted instead.

Home ownership fans long praised the social benefits of more people "owning" (better described as "in hock up to their eyeballs") houses as prices rose. Home ownership, they argued, fostered better educational achievement and civic participation, improved household health, lowered crime rates, and made more stable communities.

That's misleading. Remember "subprime" lending? People who could least afford to buy a home, being high-risk borrowers in the eyes of lenders, got mortgages with the most perilous of terms.

Consider how much less nasty the U.S. economic crisis and home foreclosure fiasco might have been if so many marginal mortgage borrowers had not been approved to buy a home beyond their means?

Yet backers of Fannie and Freddie argue the recession would have been far worse had the current housing subsidies and backstops not been in place to soften the blow.

In 2009, the U.S. median sales price of a single-family home was $172,100. The Center for Responsible Lending argues that "even with a substantial savings commitment" of $3,000 per year, it would take a family 14 years to accumulate the cash needed for a 20 percent down payment.

Okay. But the same family saving $3,500 annually for eight years could put 20 percent down on a lesser home of $140,000.

Qualifying to buy a home used to take time and disciplined saving. Changing the gotta-have-a-home-now mind-set and avoiding the overleveraged home loan may be good public policy after all.

Contact Robert Trigaux at trigaux@sptimes.com.

Buying a home may take more time, savings as federal subsidies fade away 03/07/11 [Last modified: Monday, March 7, 2011 9:34pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Last steel beam marks construction milestone for Tom and Mary James' museum

    Growth

    ST. PETERSBURG — Tom and Mary James on Wednesday signed their names to the last steel beam framing the 105-ton stone mesa that will be built at the entrance of the museum that bears their name: the James Museum of Western and Wildlife Art.

    The topping-out ceremony of the James Museum of Western & Wildlife Art was held Wednesday morning in downtown St. Petersburg. Mary James (from left), husband Tom and Mayor Rick Kriseman signed the final beam before it was put into place. When finished, the $55 million museum at 100 Central Ave. will hold up to 500 pieces of the couple's 3,000-piece art collection. [Courtesy of James Museum of Western & Wildlife Art]
  2. Heights Public Market to host two Tampa Bay food trucks

    Business

    TAMPA — The Heights Public Market announced the first two food trucks for its "rotating stall," which will feature new restaurants every four months. Surf and Turf and Empamamas will be rolled out first.

    Heights Public Market is opening this summer inside the Tampa Armature Works building.
[SKIP O'ROURKE   |   Times file photo]

  3. Author Randy Wayne White could open St. Pete's biggest restaurant on the pier

    Food & Dining

    ST. PETERSBURG — The story begins with Yucatan shrimp.

    St. Petersburg Deputy Mayor Kanika Tomalin, pilot Mark Futch, Boca Grande, St. Petersburg Mayor Rick Kriseman, and author and businessman Randy Wayne White,  Sanibel, exit a Maule Super Rocket seaplane after taking a fight around Tampa Bay off the St. Petersburg waterfront, 6/28/17.  White and his business partners are in negotiations with the City of St. Petersburg to build a fourth Doc Ford's Rum Bar & Grille on the approach to the St. Petersburg Pier with a second event space on the pier according to White. The group met near Spa Beach after a ground breaking ceremony for the new pier. "We want to have our business open by the time the pier opens," said White. Other Dr. Ford restaurants are located on Sanibel, Captiva and Ft. Myers Beach. SCOTT KEELER   |   Times
  4. Guilty plea for WellCare Health Plans former counsel Thaddeus Bereday

    Business

    Former WellCare Health Plans general counsel Thaddeus M.S. Bereday pleaded guilty to one count of making a false statement to the Florida Medicaid program, and faces a maximum penalty of five years in federal prison. A sentencing date has not yet been set, acting U.S. Attorney W. Stephen Muldrow of the Middle District …

    WellCare Health Plans former general counsel Thaddeus M.S. Bereday, pleaded guilty to one count of making a false statement to the Florida Medicaid program, and faces a maximum penalty of five years in federal prison. A sentencing date has not yet been set, acting U.S. Attorney W. Stephen Muldrow of the Middle District of Florida stated Wednesday. [LinkedIn handout]
  5. DOT shows alternatives to former Tampa Bay Express toll lanes

    Transportation

    TAMPA — State transportation officials are evaluating at least a half-dozen alternatives to the controversial Tampa Bay interstate plan that they will workshop with the community over the next 18 months.

    Florida Department of Transportation consultant Brad Flom explains potential alternatives to adding toll lanes to Interstate 275 during a meeting Wednesday at the DOT’s Tampa office. Flom presented seven diagrams, all of which swapped toll lanes for transit, such as light rail or express bus, in the I-275 corridor from downtown Tampa to Bearss Avenue.