Jon Smirl

When Will Housing Prices Return to Previous Highs?

In a 10 year time frame inflation is going to come into play. How much inflation is $2T in government spending going to cause? George's brother's rent will increase with inflation. George's house is going to inflate and he will be paying that loan off with inflated dollars. 5% compounded over ten years is 62%. 8% is 215%.

Also, a major of those 4M homes for sale are owned by people who will buy another property immediate upon sale.

A Simple Housing Fix: Government Buy-Down of Mortgage Balances

Reducing principal is a thirty year give away. The probability that any of these loans will still be underwater in thirty years is very close to zero. With the coming inflation from the massive stimulus already baked into the system you'll probably see 100% or more appreciation from the price you paid no matter what you paid. Forty years ago my parents paid $18,000 now their house is worth $500,000. That's inflation at work. Inflation is not going away, it just takes time for the compounding effect to really add up.

A Simple Housing Fix: Government Buy-Down of Mortgage Balances

Even simpler fix - temporarily allow the deduction of 200% of mortgage interest paid on pre-existing loans. This could be enacted tomorrow and reduced or repealed at anytime. The costs are known exactly from IRS data. The greatest benefits automatically flow to the people paying the highest interest rates. Don't forget that people with 20 year old loans are mostly paying back principle, not interest.

Increasing this deduction would cause many low income home owners to pay no income tax. If eliminating your income tax liability isn't enough to save you, you really can't afford the house you are in.

Better to Rent than Buy a Home

You are assuming the ability to stably rent for long periods of time. When housing starts trending up again a lot of renters will get evicted so that the houses/condos can be sold. This forces the renters to seek new accommodations under unfavorable circumstances and not at times of the renter's choice. This disruption can have large costs associated with it and it can happen over and over. It's the recurring forced relocation that ruins renting.

March S&P/Case-Shiller Figures

The charts are really hard to compare since the scale is different in every chart.