Home buying is broken. No reasonable person can take on a $300k+ asset that could in dip in value in any meaningful way. So all politics MUST exist to increase home values. Otherwise, they could dip by small %s and cause a financial meltdown for millions
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For most of the past generations world, home loans were wealth creation machines. And it was. For one, maybe two generations of white folks. It unfortunately came at the expense of everyone else.
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So a wild, unpopular, radical proposal could be to outlaw traditional home loans. Instead, propose a new loan where if a house increases in price, the bank takes the equity. If the house decreases, the loan decreases.
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Insure buyers against loss of equity and take away the concept of a house as an “investment” A house never was a fair investment, since no reasonable person can afford to take it’s true risk.
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This is, expectedly, a horribly unliked pill to swallow. But what happens to the next generation, or the one after, if we only allow house prices to go up? We’re leaving our children and grandchildren with nowhere to live.
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If there’s anything I think the young millennials or gen-z should get right, it’s swallowing hard pills for future generations. Let us be the tree planters and bridge builders.
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Replying to @evanjconrad
Had me for the first 2 tweets. Lost me afterward. Home values mostly rose at or around inflation til the 70s. I suspect the reason they started accelerating faster was bc the loss of other pieces of the social safety net caused people to double down on real estate to compensate.
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I think policy has to offer a clear alternative default safety net/wealth building tool, if you turn homes into more of a neutral asset.
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Replying to @kimmaicutler
I’d definitely agree, and I’m unclear what that would be. But my guess is that, if people were free to spend their money elsewhere, or to spent their dti ratio somewhere else, would something else develop?
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