Cult Of Home Ownership "dangerous And Damaging"

[@contradevian]

FT Pay wall. Complying with FT and Fubra reposting terms.

Just do the Google thingy:

http://www.ft.com/cm...l#axzz2aEZzz9yc

The real issue, however, is the harm done by efforts in the UK and US to maintain and increase that rate. Start with the distortion to savings behaviour that mortgage subsidies and high loan-to-value ratios encourage. For many American and British households, their home equity is their primary financial asset. In other words, we incentivise middle-class households to leverage the bulk of their savings into a highly volatile, difficult to price asset, which is subject to disaster risk both idiosyncratic (fire, tree falling on the roof) and general (flood, local industry closure), and which – based on the economic fundamentals – should return at best the average rate of local wage and population growth.

This article was retweeted by Danny Blanchflower as Posen is a "pal" apparently.

Some interesting comments (which I don't think are behind the paywall) one citing the poor legal protection and security for tenants in the UK

Comment:

People's ideas of investment returns from property are exaggerated. The Nationwide house price index is up 3.4x in the last 25 years. Over the same period the FTSE250 has gained 6.5x. Only the use of substantial leverage can make property investment a good deal - and that too has a cost.

Edited July 27, 2013 by aSecureTenant

[richc]

FT Pay wall. Complying with FT and Fubra reposting terms.

Just do the Google thingy:

http://www.ft.com/cm...l#axzz2aEZzz9yc

This article was retweeted by Danny Blanchflower as Posen is a "pal" apparently.

Some interesting comments (which I don't think are behind the paywall) one citing the poor legal protection and security for tenants in the UK

People over-invest in housing because idiots like Posen and Blanchflower dominate monetary policy.

He now writes this condescending nonsense about how people should rent rather than buy, but while on the MPC he was quite happy to screw over the people who made that decision.

[Bloo Loo]

People over-invest in housing because idiots like Posen and Blanchflower dominate monetary policy.

He now writes this condescending nonsense about how people should rent rather than buy, but while on the MPC he was quite happy to screw over the people who made that decision.

thats because a "professional" puts private feelings aside and does the Job for which he is paid...his job was to protect the banking system, which made a bundle of losses in the mortgage lending market...a professional can NEVER admit they are wrong.

[@contradevian]

Interestingly this article has just been retweeted by Nick Boles Planning Minister.

[Bland Unsight]

I've got a massive problem with this article. In the concluding paragraph he's trotting out the standard line about "well, the government should get out the way and then everything will be fine", which is all well and good as economic theory but I've come increasingly to the view that house prices are really a purely political object and reflect the relative political strength of different players at any given time.

In the UK we still really have a serf mentality when it comes to land. We blithely accept that someone should be able to extract an economic rent from us just because we need access to the ground under our feet. We further accept that planning regimes that come from a different time should persist even though now their most important consequence is to preserve high levels of economic rent extraction.

We've basically lost the plot, (no pun intended).

What I want from the UK housing market is the best quality housing at the lowest possible price which can be accessed in various ways (fixed term tenancies with limited rights, longer tenancies with much greater rights and ownership) to best suit my needs given my savings, earnings and desire for mobility. (What I find is a rigged market being used to bail out the banks.)

Proposing that the problem is a cult of home ownership is frankly ludicrous. If the political classes, civil servant technocrats and large private commercial interests (banks, builders, landowners) all happily connive to produce a market place for housing that appears to reward the private individual for loading up with debt and joining the cult, it's more than slightly disingenuous for a leading cult priest to turn around and say. "Why on Earth have you taken out a big mortgage and bought a house?"

In fact, it's even worst that that as we've now entered a second phase where it's totally clear that had the same brand of economic liberalism that provided a narrative during the boom been allowed to function during the bust, there would be hardly a solvent bank in the country and a very significant portion of the 11 million or so UK mortgages would be deep underwater.

In point of fact what the priests actually did was change the rules of the game. Clearly they did it to buy the the banks the government time, but as the major accidental beneficiaries (for the time being) were people who loaded with debt and bought houses, the ridiculousness of this article is even more manifest.

First the priests say, "Borrow and we'll make you rich." When the inevitable bust arrives the self same priests take a course of action that favours those that want to hold their claims to wealth in bubblicious assets (houses) over those who wanted to hold their claims to wealth in cash. Now a leading priest is saying "What's with all the borrowing and house buying - are you guys like in a cult or something?"

Maybe mortgage financed home ownership is a cult, but in terms of the actions of state to make the cult's prophecies appear to come true, in nominal, (QE, FLS, Help to Buy mortgage guarantees) , you'd have to say the cult looks to be on empirically sound footing for the time being.

What a joke.

[dances with sheeple]

I've got a massive problem with this article. In the concluding paragraph he's trotting out the standard line about "well, the government should get out the way and then everything will be fine", which is all well and good as economic theory but I've come increasingly to the view that house prices are really a purely political object and reflect the relative political strength of different players at any given time.

In the UK we still really have a serf mentality when it comes to land. We blithely accept that someone should be able to extract an economic rent from us just because we need access to the ground under our feet. We further accept that planning regimes that come from a different time should persist even though now their most important consequence is to preserve high levels of economic rent extraction.

We've basically lost the plot, (no pun intended).

What I want from the UK housing market is the best quality housing at the lowest possible price which can be accessed in various ways (fixed term tenancies with limited rights, longer tenancies with much greater rights and ownership) to best suit my needs given my savings, earnings and desire for mobility. (What I find is a rigged market being used to bail out the banks.)

Proposing that the problem is a cult of home ownership is frankly ludicrous. If the political classes, civil servant technocrats and large private commercial interests (banks, builders, landowners) all happily connive to produce a market place for housing that appears to reward the private individual for loading up with debt and joining the cult, it's more than slightly disingenuous for a leading cult priest to turn around and say. "Why on Earth have you taken out a big mortgage and bought a house?"

In fact, it's even worst that that as we've now entered a second phase where it's totally clear that had the same brand of economic liberalism that provided a narrative during the boom been allowed to function during the bust, there would be hardly a solvent bank in the country and a very significant portion of the 11 million or so UK mortgages would be deep underwater.

In point of fact what the priests actually did was change the rules of the game. Clearly they did it to buy the the banks the government time, but as the major accidental beneficiaries (for the time being) were people who loaded with debt and bought houses, the ridiculousness of this article is even more manifest.

First the priests say, "Borrow and we'll make you rich." When the inevitable bust arrives the self same priests take a course of action that favours those that want to hold their claims to wealth in bubblicious assets (houses) over those who wanted to hold their claims to wealth in cash. Now a leading priest is saying "What's with all the borrowing and house buying - are you guys like in a cult or something?"

Maybe mortgage financed home ownership is a cult, but in terms of the actions of state to make the cult's prophecies appear to come true, in nominal, (QE, FLS, Help to Buy mortgage guarantees) , you'd have to say the cult looks to be on empirically sound footing for the time being.

What a joke.

Nah, there are too many outside forces bursting through the jungle to disrupt their secret camp. The actions of the PTB are a bit like giving everyone a suicide pill, telling them to chew and swallow, then rushing round later trying to do CPR

[Venger]

I've got a massive problem with this article. In the concluding paragraph he's trotting out the standard line about "well, the government should get out the way and then everything will be fine", which is all well and good as economic theory but I've come increasingly to the view that house prices are really a purely political object and reflect the relative political strength of different players at any given time.

In the UK we still really have a serf mentality when it comes to land. We blithely accept that someone should be able to extract an economic rent from us just because we need access to the ground under our feet. We further accept that planning regimes that come from a different time should persist even though now their most important consequence is to preserve high levels of economic rent extraction.

We've basically lost the plot, (no pun intended).

What I want from the UK housing market is the best quality housing at the lowest possible price which can be accessed in various ways (fixed term tenancies with limited rights, longer tenancies with much greater rights and ownership) to best suit my needs given my savings, earnings and desire for mobility. (What I find is a rigged market being used to bail out the banks.)

Proposing that the problem is a cult of home ownership is frankly ludicrous. If the political classes, civil servant technocrats and large private commercial interests (banks, builders, landowners) all happily connive to produce a market place for housing that appears to reward the private individual for loading up with debt and joining the cult, it's more than slightly disingenuous for a leading cult priest to turn around and say. "Why on Earth have you taken out a big mortgage and bought a house?"

In fact, it's even worst that that as we've now entered a second phase where it's totally clear that had the same brand of economic liberalism that provided a narrative during the boom been allowed to function during the bust, there would be hardly a solvent bank in the country and a very significant portion of the 11 million or so UK mortgages would be deep underwater.

In point of fact what the priests actually did was change the rules of the game. Clearly they did it to buy the the banks the government time, but as the major accidental beneficiaries (for the time being) were people who loaded with debt and bought houses, the ridiculousness of this article is even more manifest.

First the priests say, "Borrow and we'll make you rich." When the inevitable bust arrives the self same priests take a course of action that favours those that want to hold their claims to wealth in bubblicious assets (houses) over those who wanted to hold their claims to wealth in cash. Now a leading priest is saying "What's with all the borrowing and house buying - are you guys like in a cult or something?"

Maybe mortgage financed home ownership is a cult, but in terms of the actions of state to make the cult's prophecies appear to come true, in nominal, (QE, FLS, Help to Buy mortgage guarantees) , you'd have to say the cult looks to be on empirically sound footing for the time being.

What a joke.

"Why on Earth have you taken out a big mortgage and bought a house?"

I've not done that because they're massively overpriced. Insanely so. That I know professional couples, accountants, solicitors, IT, who can't ever buy mid-range houses that have been bid upto £350,000 - £500,000 without taking a debt-suicide type position that relies on forever HPI / wage inflation / credit expansion to narrow their position over the years. So who else is going to buy them?

The cult needs to experience its doomsday. And that cult involves older owners, bomads, property investors... even young people who've just bought a flat at a silly high price with mini-kitchen/lounge room, wanting hpi even though it will likely hinder future trade up plans. Government should get out of the way with its schemes, and playing EA; "young people want mortgages."

Smart younger people don't want massive debt for basic housing.

Edited May 21, 2014 by Venger

[interestrateripoff]

They want to destroy the wealth of the nation! Traitors!