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I almost didn't write this, because from my perspective, "In a world where most people don't have coherent thoughts on Topic X, here's a politician who also doesn't have coherent thoughts on Topic X," may be a bit boring. I decided to write it anyway, because it gives a quick hook to the root of the issue, and I might as well lay it out in detail somewhere.
So, Trump speaks on the price of housing. For some societal context, there has been a bit of a movement toward trying to lower the cost of housing. YIMBY is oriented somewhat in this direction; I've even heard the phrase "Housing Theory of Everything" describing the perspective the high housing costs have a variety of other knock-on effects, and so it would be desirable to lower the cost of housing.
Trump highlights the core of the problem. He doesn't want to lower the value of "existing" housing. "People who own their home" should be kept wealthy with high house prices. But the kicker is that there's no way to economically separate the value of "existing" housing and the "people who own their homes" from, uh, "non-existing" housing? As sure as the day is long, if you have a stock of houses, each worth $1M, and then conjure out of thin air a plentiful amount of previously "non-existing homes" that only cost $500k to buy but are otherwise just as desirable, what's going to happen when an existing homeowner decides to sell their house? They'll list it for $1M, but all the potential buyers will look at that, look over at the same deal for only $500k, look back and think, "WTF? Why would I spend that much?" They're going to buy the cheap one. And so, if the existing homeowner wants to successfully sell his home, he will have to lower the price.
...but since everyone already knows that he would have to lower the price (since the price of whatever magical disconnected-from-existing-housing has been lowered), then everyone already knows that the "value" of that existing home is, uh, lower. These things are obviously connected; you can't just hold one constant and tweak the other.
I continue to maintain that the vast majority of folks out there simply do not have a coherent view on the simple question, "Should the cost of housing be higher or lower (or, I guess, the same)?" They want to magically keep the value just exactly as high or higher for existing homeowners, but somehow magically make housing otherwise generally cheap.
You can try (and oh boy does the government try) to come up with ways to just throw cash at the problem, but these efforts generally run into two major types of problems. First, that cash has to come from somewhere. Almost always, that's taxes. Who do you think is paying those taxes? This one we might file under the "obfuscation theory of government". If you hide it well enough that people don't realize that the cash being thrown at the problem to make it look like their right pocket is just as wealthy as it ever was is in fact coming out of their left pocket, they just might not realize?
Second, most schemes end up having to play endless whack-a-mole for the follow-on effects if they want to maintain general cheap housing while keeping house prices high. For example, all the business about throwing cash at first-time home buyers. Some of that reduces the cost to folks who don't own a house, and some of that increases the price of the houses (going to the sellers), and that seems like it could just solve the problem, right?
Well, consider a renter. They're not getting the bag of cash thrown their way. But the price of the houses that they'd like to rent are going up. So their rent is going up. So the cost of "housing" isn't going down for them. Are you going to play whack-a-mole and start subsidizing rent, too? This way Venezuela lies. What if you just jack up the FTHB cash-throw? Just accept that renting is going to be basically infeasible, because getting into the home-borrowership (to use a phrase from Arnold Kling) carousel is now too economically attractive in comparison. Sure, you'll end up with fake and gay high house prices, but everyone "gets in", right? But even then, your 'wealth' is fake and gay. Suppose you want to sell your house and reap the sweet sweet value that you have. Well, where are you going to live? Renting is infeasible (by design). Are you going to buy a different house that also has a fake and gay high price? Suddenly, your gainz disappear. All the while you're paying more interest, more property tax, and more transactions costs (that realtor still costs 3% of a fake and gay high price).
Someone will surely try to come up with this scheme and that scheme to whack this mole or that mole, but I press X to doubt that you can technocrat your way to a solution, especially one that doesn't cost gigantic bags of cash coming out of the general treasury (and ultimately, taxpayers' pockets).
The fundamental question, "Should the cost of housing be higher or lower (or, I guess, the same)?" confuses a lot of people and is probably one of the core problems of our time that produces a multitude of political dysfunction.
People who own houses often have it as their primary asset. Reducing the value of real estate is, in a very real sense, making them poorer. And people who own homes vote.
The American Dream is basically 'what if everyone was part of the land-owning class?' and then people are surprised that as a newly endowed member of that class, they are opposed to the renting class and new buyers. Well, no shit! You've spent a great amount of government subsidy to align their interests in that way.
Trump is just being honest in that he is siding with the landowners. Anyone who is an advocate for reducing the price of housing but isn't for building new construction is a liar who is a part of the problem. Their best ideas for reducing the price are to subsidize the demand and this is why structural reform is impossible.
The thing is though, if you are for building new construction, possibly in connection to wanting to reduce the price of housing, the predictable surety is the value of houses currently owned by people will go down.
I should have spent more time trying to find the rest of the context of that clip. I debated it, but was lazy. There is a clue in that he briefly says, "We're going to make it easier to buy." A longer clip is here. He talks about this repeatedly. Making it "easier" for people who don't own houses to buy houses. The repeated message of the Secretary of HUD is about how they're making it so that millions more people "can afford" to buy houses. How is it "easier"? How is that they "can afford"? The major talking point is interest rates. ...as if lowering interest rates has no effect on the sale prices of houses. Lowering monthly mortgage amounts, offering lower down payment options like FHA loans or whatever, sure, these things get people into home borrowership, but they have other effects, too. Do people already forget the impacts of the drive to push more and more people into home borrowership twenty years ago, even resulting in significant impacts to government coffers as they were left picking up the pieces.1 These things are the sorts of ridiculous tinkers one comes up with to try to look like one is solving the problem when one hasn't grasped the reality of the core tension.
Trump is honest in that he's saying that he's siding with landowners, and he wants you to believe it. He's honest in that he's saying he's siding with people who want to buy houses, and he wants you to believe it. So we'll keep pushing the same flawed fake solutions, try to play whack-a-mole in the process, and never accept the limit of technocratic solutions.
1 - I've been lucky in that I decided a few years ago to start listening to the entire back catalog of EconTalk. It started in 2006, and I'm around 2011 now. There are plenty of episodes that aren't housing-related, but there is an incredible breadth and regular stream of folks grappling with and trying to understand the housing crisis, the crash, and the process of recovery. I guess I've been stewing in it enough that it's clear what people thought they were trying to do, how it sounded nice, how it all went wrong, and now we're basically repeating the same tune, just a different key.
You don't even have to go back that far. The most recent appreciation in housing prices from the COVID era and renewed discussions on affordability directly stem from the wave of home purchases from the era of rock-bottom interest rates. It's basic supply in demand. Sale prices of homes are more reflective of mortgage payments than they are of the sticker price; it makes more sense to talk about a $1500/month house than a $250,000 house. This difference is especially clear in the Pittsburgh area, where houses just outside of Allegheny County command a price premium due to lower property taxes. If there's a class of people who couldn't afford a particular house at 7% but now can at 3.5%, the house is going to cost more.
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