Replies

“the value of real estate has only seen growth equal to inflation which basically puts home values flat for most of the 1900’s relative to your personal income.”

This doesn’t make sense. Real incomes (i.e., after inflation) have risen pretty steadily over the past 110 years. Real GDP per capita in the U.S. is at least 6 times what it was in 1900. Thus, if housing prices truly simply kept pace with inflation, housing would become more and more affordable every year rather than flat relative to personal income.

My guess is that the “average” house may well represent the same share of personal income today as 110 years ago, but the reason is that the average house is much bigger and has many more amenities (e.g., in-house toilets!) than in 1900. Indeed, the average poor family now lives in housing that is roughly equal in size to the houses typical for middle class families in the 1950’s, which is consistent with this same story.

So if people buy a house in their 20’s and try and sell it 40 years later, it may well be that they did no better than beat inflation in terms of the price of the house. However, a) in the interim, they will have swapped a mortgage debt for 100% equity, so the cash they take out is far higher (even after inflation) than the downpayment they originally put in; and b) many retirees are able to downsize once their children have grown.

Consequently, even after inflation, it is quite possible to have a sizable nest egg left over once the old home is sold and a smaller home purchased etc. Equivalently, many people are able to remain in their homes by using a reverse mortgage to pull out equity built up over decades. None of this undercuts the authors’ central point that regulation got us into this mess. Who could argue with that?

De-regulate

Reason:
simple
1: All federal financial regulations are beyond the scope of the United States Constitution.
2: Federal regulations only serve to aid big corrupt financial institutions like Moody helping to keep them in power by allowing their judgment to be used as a part of federal regulators. This alone makes for an unhealthy market, prone to easy exploitation.

3: All regulations an an infringement upon American freedoms and fundamentally unethical, anyone who wants to gamble in the stock/investment market deserves to face the risks of the same gambling unprotected. Allowing them to inflate the currency for theses investment thou fractional reserve banks particularly the Federal reserve not only makes the problem 10 times worse but helps them rob from all other Americans.