Robert Samuelson:
If you're a 20-something or even younger, your economic future is at best clouded. Your taxes will almost certainly be higher than today's; your public services (schools, police, sanitation, defense, scientific research) will almost certainly be lower. Paying for old people, covering rising health costs, repairing dilapidated roads and servicing government pensions and the huge federal debt will squeeze take-home pay. Is there any hope for economic gains?
Well, yes — and from a surprising source. Housing. Say what?
Almost everyone considers the housing collapse a disaster, and it is. Since 2007, roughly 8 million homes have gone into foreclosure. Housing prices, according to the Case-Shiller index, are down about 33% from their 2006 peaks. They're still falling, albeit at a slower pace. In some cities (Atlanta, Cleveland, Las Vegas, Detroit, Phoenix), they're at or below 2000 levels. Home sales are stunted, and construction is a quarter of its previous peak. this implosion retards the economic recovery. Aside from unemployed carpenters and real estate agents, there's much unsold lumber, carpet and appliances.
But housing's troubles may have a silver lining. If you're a homeowner, the steep fall in prices is calamitous. But if you're a future buyer, it's a godsend. We're seeing a massive wealth transfer from today's older homeowners to tomorrow's younger homeowners. From year-end 2006 to 2010, housing values fell $6.3 trillion, reports the Federal Reserve. Assuming there's no sharp rebound in prices — a good bet — that's $6.3 trillion the young won't pay.
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I don't think this is what Democrats meant with their push for "affordable" housing. But it is their policies that did it. By pushing to get people who could not afford homes into the mortgage market they caused a collapse of epic proportions and we are all paying for it. At least the kids can try to make the best of a bad situation.
Image by Getty Images via @daylife
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