Why Does the Government/Fed Promote Home Ownership?

[Smaulgld]

The Fed is promoting low interest rates supposedly to boost housing prices to help the economy.

You might think that the goal would be to make homes LESS expensive and therefore more affordable.

But instead they promote a debt driven economy that encourages people moving in and out of ever more expensive old houses.

They find a willing trade organization-the National Association of Realtors to support the cause:

“Right now may actually be one of the best times to buy a home” National Association of Realtors 2006 Marketing Campaign


As it turned out when that statement was made, it was probably the worst time to buy a home.


Promoting home ownership as a primary real estate marketing ploy is a mistake that the National Association of Realtors (NAR) and its REALTOR members often make because:


-they run the risk of giving bad advice – it can’t always be a good time to buy a home*; and
-it sounds more like “now is one of the best times for us to make commissions”.


I understand the logic. If more people would buy homes, there would be more work for Realtors.


Imagine, however, if the American Bar Association were to run ads blaring:...


http://smaulgld.com/real-estate-marketing-gone-wrong/

[tod evans]

Building has always been an indicator of how well any given area is doing economically.

Sales is a traceable way to monitor building for the suits not out in the field.

Following that simple logic, selling more homes cooks the books to show an improved economy.

The construction industry hasn't been this depressed in twenty years and no amount of slick paper shuffling is going to turn it around.

[Seraphim]

Taxes. Taxes. Taxes.

[Smaulgld]

Tod
Good points- what is missing in this housing "recovery"is that less than a half a million new homes are being built vs 1.5 million in 2005.
There is economic activity involved in the construction of new homes, but very little involved of people moving in and out of existing homes

[Smaulgld]

Seraphim-yes rising home values =rising property taxes for the municipalities

[Seraphim]

Additionally, as banks lend to expand the money supply - it spreads across through building, home based consuption etc and, in the short run increases revenue and thus income taxes.

Taxes across the board.

Seraphim-yes rising home values =rising property taxes for the municipalities

[ClydeCoulter]

Taxes. Taxes. Taxes.

Yep you mow the lawn, fix the toilets, buy insurance, pay property taxes, pay interest on the debt portion (little on principle), etc...it's a win/win, ummm

and the upside is you get to do what you want on your yet to be paid for property (which is never because of property tax) so long as the HOA, neighbors, county and city ordnances, etc... approve.

[Blueskies]

The Fed is actually quite limited in which markets it can directly affect. Housing is one of them.

More broadly, TBTB have supported housing in the US for decades. The reasons for this are many.

1. Tax revenue from rising land value
2. Stability. A house is in a way sort of like a savings account. It's a way to force the ignorant masses to save.
3. Workers with mortgages are less likely to strike

[Dr.3D]

Yep you mow the lawn, fix the toilets, buy insurance, pay property taxes, pay interest on the debt portion (little on principle), etc...it's a win/win, ummm

and the upside is you get to do what you want on your yet to be paid for property (which is never because of property tax) so long as the HOA, neighbors, county and city ordnances, etc... approve.

So far I do what I want without their approval. So far, it costs more to get their approval than it does to just pay the fine afterwards.

[messgnJess]

Government promoting American Dream of owning house

[Zippyjuan]

Rising housing sales are a symptom of consumer confidence and security. That means an improving economy. Then when people buy a new home, they also spend more money related to it- doing remodels, buying new furniture- that means more demands for other goods and services beyond just the houses themselves and that can lead to more jobs in other areas.

[Carlybee]

cashflow