Expanding Homeownership?

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Yesterday, Scott Lewis wrote a great piece on the logical inconsistencies of some of the the city's affordable housing efforts.

One such policy, while having escaped Scott's truculent attentions, nonetheless deserves to be highlighted as especially irrational. It is described in a recent Daily Transcript piece called "Sanders seeks action on affordable housing" (subscription required):

... the [San Diego Housing Commission] is continuing its efforts to expand homeownership through the creation of two new, first-time homebuyer programs ...

Giving people money to buy houses artificially stimulates housing demand (sorry, "expands homeownership"), the effect of which is to render housing less, not more, affordable. It's effectively a government subsidy for the housing bubble and entirely the wrong way to approach the problem.

On the broader topic of housing policy, the Transcript article later quotes Mayor Sanders:

"Local government is limited in just how much it can do to influence the housing market and prices, it can [sic] still play an important role in securing San Diego's housing future," Sanders said. "It is time for action."

I certainly agree about the first bit, but for the rest I am not so sure. The "time for action" was years ago. And rather than attempts at economic knob-twiddling, the appropriate action was to eschew the real estate industry Kool-Aid and to publicly acknowledge the fact that home prices were likely being driven more by euphoria and loose lending than by demography and economic strength.

Any politician willing to call the housing bubble what it was would have gotten my vote. But probably nobody else's. I guess that's the problem.

-- RICH TOSCANO