It's been floated that Harris wants to give away $25,000 to first time/generation home buyers for down payment assistance. Anyone with half a brain knows that this is a bad idea for the housing market (except for sellers), and an attempt to buy votes from a constituency that is already voting blue.
But, what if there was a better way to incent first time buyers, that would have more positive effects?
What if you could accomplish similar things without the negative effects?
So, just for grins, let's consider this. What if FHA went to a zero down payment model, and used some of the $25k to buy down interest rates for first time buyers?
First, this wouldn't automatically add $25k to the low end of home prices.
Second, this would attract stronger buyers to FHA loan and would offset some of the less stronger buyers who end up in foreclosure.
Third, it's likely that it would tend to push conventional rates down as well because competition.
I know it's not simplistic, it's not overtly buying votes, it's not a quick sound bite, but it makes a hell of a lot more sense.
2 comments:
But aren't you still suggesting my tax dollars go to help others get a home? I might be missing something, but it doesn't make any more sense to me. I'm still out the tax dollars which would be better used by giving it back to me.
1. Assuming that tax dollars are going to be spent on this, this seems like a better and more effective way to do so.
2. Loaning someone tax dollars against and appreciating asset seems like a better option than giving them tax dollars.
3. This is not a detailed policy position, rather a quick alternative to the Harris trial balloon.
4. Again, assuming that tax dollars will be spent, this has the benefit of helping the broader market by driving conventional rates down instead of driving prices up.
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