The third point - helping poor people buy houses - is exactly what @conorsen and I called for in a well-timed post shortly before Warren released her plan:https://www.bloomberg.com/view/articles/2018-09-24/america-needs-policy-to-revive-the-dream-of-homeownership …
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1 and 4 sound obviously good, 2 sounds alright, and 3 sound like a foot gun.
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It's what Conor Sen and I called for a few days before the plan came out!https://www.bloomberg.com/view/articles/2018-09-24/america-needs-policy-to-revive-the-dream-of-homeownership …
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Haven't seen the research you cite before so I'll give it a read, but it does seem unintentionally regressive to incentivize poor people to tie themselves to a large illiquid asset that is likely in an unproductive area because that's what they can afford.
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You can make the grants conditional on buying a house in a productive area.
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Sounds dangerously close to redlining.
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That's one of several things I'm worried about.
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You're kidding, right? This is explicitly the opposite.
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Not at all, it depends on how you define "productive area". And for that matter the productive areas of one time period don't necessarily equal the productive areas of another time period. Exposes people to a lot of risk over time.
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I like it too, but it’s not enough. Building more housing in the wealthier communities will be needed if we want to increase housing supply sufficiently. The block grants she proposes are too small to induce wealthier communities.
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Probably true but this is a start.
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I do worry about #3. Homes are the most leveraged and undiversified investments around. This must be handled with care.
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How much of the housing crisis is related to crushing student debt with stagnant wages?
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Little. Rents went way up; wages had been stagnating for a while. Student debt should reduce housing demand all else equal.
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First 2 look good. 3rd has a poor track record - can have negative consequences for groups trying to help. 4th is good in theory, problematic in practice, bc groups are actually different in important loan metrics (credit scores, liquid assets, education, ...).
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Can you cite any evidence that (3) has a poor track record?
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Please take the following as entirely sincere: I take this as so entirely self evident from 2007 that I first want to make sure we aren’t talking past each other? Ie my view: the primary homebuyers hurt in 2007 were the over leveraged.
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Combination of banks failing to underwrite and overuse of ARMs. Then after the collapse banks refused to refinance the ARM loans - which contributed to another wave of foreclosures when the mortgage increased.
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1 is good. 2 could be good depending on what "affordable housing" means. 3. and 4. not so much.
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(4) won't end up being much of a change, but (3) is important and very good.
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Haven't we been down the road of trying to raise home ownership of non-creditworthy people? Why again? I thought we needed more mobility.
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