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CONLEY COMMENTARY (WSAU) – I already feel like a sucker for having paid my college tuition. How was I to know that a generation later students would take out tens-of-thousands of dollars in student loans to have them forgiven.
My parents didn’t take lavish vacations; they put extra money into a college fund for me and my sister. When I worked at WJBX radio in high school, my father confiscated my paycheck. He’d give me $10 or $15 for spending money, and would put the rest in the bank for college. I paid my own way. Now others are getting a free ride.
So now I also feel stupid for actually saving up for the down-payment for my house. My home is modest. I bought it four years ago for $100,000. And I made a 20-percent down-payment; $20,000. I saved up for most of it, and dipped into my retirement account for the rest.
How stupid I was. Now Kamala Harris proposes that the government offer down-payment assistance for some homebuyers. In other words, people who scrimped and saved for their homes… and people who rent and don’t own anything… should now have their tax dollars pay for other people’s homes. Kamala argues that the government helping someone put down 20-percent will make mortgage payments more affordable month-to-month.
One of the things that will go out the window is a reliable rule of thumb: someone indicates they are ready to be a homeowner when they have the financial discipline to save up for it. When the buyer has skin in the game, they’re far less likely to walk away from their home if times get hard.
This will cause inflation in the housing market. My home is assessed at $140,000. If I were to hang a for sale sign today, that’s a reasonable price for my home. But why would I offer it at that price if I know that the first $20,000 is free money for a buyer… he’s getting that from the government. So I would offer my home at $160,000. So would everyone else selling a home. They’ll adjust the price upward knowing that the buyer is getting some of the money from somewhere else.
Don’t believe me? Then why are the costs for healthcare, college tuition, and auto repairs so expensive. Because health insurance, grant money, and collision insurance cover some of those costs. The actual user isn’t paying all of the price.
If you have a good memory, recall what happened the last time the government meddled in the housing market. Bill Clinton wanted to move more renters to home ownership. Lending standards were relaxed. Down-payment amount shrunk. People with no verifiable sources of income qualified for NINJA loans, backed by the federal government. The housing bubble that burst wiped out billions in real estate value. People owed more than the homes they were living in were worth. Many of those people are back to renting today.
Kamala has a strange sense of fairness. That taxpayers should spend their money to help other people buy homes. In her mind, pay-your-own-way is somehow unfair. You should pay for a roof over someone else’s head.
Chris Conley
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