By Robert Romano
Vice President Kamala Harris’ campaign has unveiled a new scheme to facilitate home building and home purchases with hundreds of billions of dollars of subsidies, including a $25,000 first-time homebuyer subsidy, said by the campaign to cost $100 billion to facilitate 1 million first-time home purchases a year over the next four years.
Additionally, Harris wants to expand homebuilder tax credits to facilitate construction of an additional 3 million new units over that time.
Similar incentives are already used by Congress via the Department of Housing and Urban Development and the Department of Treasury to facilitate home and apartment construction and renovation, including $3.3 billion of community development block grants, but what Harris is proposing is much larger.
In the 2000s, underwriting standards were reduced to facilitate an expansion of mortgage loans to homebuyers. a massive injection of credit as mortgage debt nearly doubled from $4.9 trillion in 2003 to $9.29 trillion by the end of 2008, according to the New York Federal Reserve data, as home prices jumped a gargantuan 40 percent according to the Freddie Mac Home Price Index. The number of mortgage holders had skyrocketed from 80 million in 2003 to 98 million in 2008. From 2003 to 2007, more than 9 million new privately owned units were put onto the market.
Afterward the financial crisis — which was created by overproducing homes leading to prices to eventually collapse (by more than 26 percent by 2011) and the last homebuyers in the bubble to be left with negative equity that many chose to be foreclosed upon rather than pay because they couldn’t afford to sell — mortgages settled back down to about 80 million mortgages with about $8 trillion of mortgage debt by 2013. Homebuilding also slowed down, with only 4.3 million new homes constructed.
There it remained relatively stable at about 80 million mortgages, but home prices once again appreciated from their bottom in 2011 by about 38.8 percent through the end of 2016, with still 80 million mortgages with mortgage debt reaching $8.5 trillion. And the pace of homebuilding picked up again, totaling 3.3 million from 2014 through 2016.
Further, from 2017 to Jan. 2021, home prices again appreciated another 32 percent, the number of mortgages reached 81 million and mortgage debt increased to $10 trillion. From 2017 to 2021, another 5.1 million new homes were constructed.
Finally, since Jan. 2021, home prices continued accelerating, up another 32.3 percent as the number of mortgages has jumped to 85 million and mortgage debt is now up to a whopping $12.5 trillion as another 6.4 million new homes were constructed, although, new private owned homes built has been dropping each of the past 3 years from its 2021 peak of 1.6 million to 1.4 million in 2023 and averaging 1.35 million in 2024 so far. Usually, home construction slows down leading into recessions, which Harris is desperately hoping to avoid until at least after the election in November.
But now, prices have gotten so high, thanks in no small part to the $7 trillion printed, borrowed and spent into existence during and after Covid, that the rate of existing home sales are plummeting, just like they did in the 2000s. In Jan. 2021, existing home sales were at a seasonally adjusted, annualized rate of 6.69 million units sold. Whereas, by June 2024, it is all the way down to an annualized 3.89 million units sold, as 41.8 percent decrease.
So, home building is up, but now home buying is down but there’s still a lot more mortgages. That means there is no supply shortage.
The reason is not because of a lack of subsidies, it is because personal incomes have in no way kept up with the rising costs of housing, only up 18.2 percent compared to home prices’ 32.3 percent. Additionally, 30-year mortgage interest rates have more than doubled since 2020, and with it, monthly mortgage payments on the same unit of housing if purchase now has similarly more than doubled.
It is into that mix that Harris wants to pour in hundreds of billions of dollars of more subsidies for both home building and first-time homebuyer downpayments, essentially a mortgage origination subsidy bringing the number of mortgages to about 90 million and beyond, the highest levels seen since the housing bubble popped, at a time when incomes are not keeping up with inflation.
Here’s a hint. A house that was worth $250,000 in Jan. 2021 is now worth $337,000. Harris wants to give the homebuyer for that existing home a $25,000 subsidy, knocking the principal owed down to $312,000. And they’d be paying about 6.8 percent in interest payments. In 2021, with interest just 2.65 percent, that same unit only cost $1,007 a month when it was worth $250,000.
So, instead of the current $2,192 a month owed for the mortgage payment on that same unit, despite hundreds of billions of subsidies in the Harris scheme, even if the prices of homes magically remained frozen which they won’t, the monthly payment drops to $2,096 a month. Wow.
All that to keep the housing expansion going, as home prices keep appreciating, and as interest rates remain high, postponing a recession that will almost certainly come anyway, only with the potential of home prices collapsing like they did in the 2000s, wiping Harris’ Democratic Party out in the 2026 midterms should she win and likely in 2028 when she hopes to get reelected.
Or we could just eat the recession now, unemployment will go up, yes (it already has by 1.47 million since Dec. 2022), but interest rates will also come down all on their own, thereby reducing monthly mortgage payments, facilitating refinancing and making first-time home purchases more attractive, allowing a more virtuous cycle to ensue. Choose your poison.
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Short reports
Jew-haters converge on DNC in Chicago: “Killer Kamala,” read one sign from an anti-Israel group stationed outside the United Center in Chicago, the site of this week’s Democratic National Convention. “Globalize the intifada,” read another. Clearly, the Democrat Party’s base has its priorities in order. And if, as Marx once said, history repeats itself “first as tragedy, then as farce,” then the authorities who are trying to prevent a repeat of the 1968 DNC have their work cut out for them. “Hundreds of people rallying against the Israel-Hamas war and restrictions on reproductive rights kicked off the first protest of the Democratic National Convention on Sunday,” reports the Chicago Sun-Times, “but they were met by an even larger showing from Chicago police.” Democrat politics make strange bedfellows, though, as embodied in this disjointed quote from one of the belligerents: “Rhetoric does not deliver abortion care from someone in a state that has a six-week abortion ban. What we need is action. We need the end to funding to Israel and the end of delivery of weapons.” Abortion on demand or the eradication of the Jews. Can’t these folks make up their minds?
DNC vasectomies and abortions: Get free vasectomies and abortions just outside the Democratic National Convention today. As The New York Times reports, “This convention is likely to be a head-on display of a new, unbridled abortion politics.” The message is clear: Democrats don’t like children. They are literally celebrating pregnancy prevention and pregnancy elimination. Convention attendants will be greeted by a number of demonstrations, including a giant “inflatable IUD” promoting birth control. Democrats see abortion rights as their leading platform issue, which explains why they are going to extreme and grotesque levels to market it. Kamala Harris’s running mate, Minnesota Governor Tim Walz, will focus his convention speech on the campaign’s support for abortion and IVF. As Not the Bee’s Joel Abbott sarcastically observes, “Looks like the Democrats are working hard to prove the nickname ‘Party of Death’ is false!”
Lawmakers launch investigation into Walz over “extensive” ties to Communist China (Daily Wire)
House GOP impeachment inquiry report: House Republicans have released their impeachment inquiry report on Joe Biden, and there’s no question it was timed to coincide with the Democrats kicking off their convention in Chicago. The Republicans launched their investigation last September, and according to the 292-page report, they “have accumulated evidence demonstrating that President Biden has engaged in impeachable conduct.” The report notes that Biden engaged in a “conspiracy to monetize his office of public trust to enrich his family.” Republicans also allege that Biden family members raked in more than $27 million, largely from foreigners, by “leading those interests to believe that such payments would provide them access to and influence with President Biden.” The report details, “As Vice President, President Biden actively participated in his conspiracy by, among other things, attending dinners with his family’s foreign business partners and speaking to them by phone, often when being placed on speakerphone by Hunter Biden.” It adds, “Based on the totality of evidence, it is inconceivable that President Biden did not understand that he was taking part in an effort to enrich his family by abusing his office of public trust.”
Mo Dowd says the quiet part out loud: It was a bloodless coup carried out by the most powerful people in the Not-So-Democratic Party, but the Democrats and their Leftmedia fellow travelers have insisted on trying to portray it as a selfless and heroic choice made by a Rushmore-worthy Joe Biden. Finally, though, someone on the Left has let slip the truth. “The Dems Are Delighted,” reads the headline to New York Times columnist Maureen Dowd’s latest column. “But a Coup Is Still a Coup.” Indeed it is, and Dowd makes no apologies for it. She writes, “Even though it was the right thing to do, because Joe Biden was not going to be able to campaign, much less serve as president for another four years, in a fully vital way, it was a jaw-dropping putsch.” This week’s DNC will ignore all this intrigue in an effort to present a harmonious house, a unified front, but that doesn’t mean it isn’t there. Biden will take the stage tonight to paper over all the bitterness, but it won’t work. He was kicked to the curb by his own party, and everyone knows it.
Undemocratic Michigan Democrats remove Cornel West from ballot: If the Democrats really think Donald Trump is an “existential threat” to “our democracy,” they sure have a funny way of showing it. Not content to have kicked Robert F. Kennedy Jr. off the ballot in New York, the party of Kamala Harris has now succeeded in throwing civil rights activist and third-party candidate Cornel West off the ballot in the crucial swing state of Michigan. The reason for this ouster? According to Jonathan Brater, Michigan’s elections director, “The affidavits of identity submitted to the Secretary of State’s Office in June for West and his vice presidential running mate, Melina Abdullah, were not properly notarized.” Let’s be clear: Cornel West wouldn’t have taken a single vote from Trump. But he most definitely would’ve pulled a few disgruntled progressives away from Harris. And in a purplish state like Michigan, those few votes could make all the difference.
https://patriotpost.us/articles/109413-monday-below-the-fold-2024-08-19
*******************************************Also see my other blogs. Main ones below:
http://jonjayray.com/covidwatch.html (COVID WATCH)
http://edwatch.blogspot.com (EDUCATION WATCH)
http://antigreen.blogspot.com (GREENIE WATCH)
http://pcwatch.blogspot.com (POLITICAL CORRECTNESS WATCH)
http://snorphty.blogspot.com (TONGUE-TIED)
https://immigwatch.blogspot.com (IMMIGRATION WATCH)
http://jonjayray.com/ozarc.html (AUSTRALIAN POLITICS)
http://jonjayray.com/select.html (SELECT POSTS)
http://jonjayray.com/short/short.html (Subject index to my blog posts)
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