Robert Lerman, a professor of economics at American University and senior fellow at the Urban Institute and Robert Cherry, a Brueklundian professor in the Department of Economics at Brooklyn College of the City University of New York just wrote “Moving Families Forward: Third-Way Policies that Work“
They also had an opinion piece featured on CNN today titled How the Government can Solve the Housing Crisis. Mr. Lerman and Mr. Cherry propose creating 1 million housing vouchers for those unable to qualify for traditional financing (i.e. broke).
Isn’t that what got us into this mess in the first place?
But these two academics reason that it’s different now. Home prices are lower. A $115,000 home is much cheaper to buy than rent. That may be true. But where are these buyers going to come up with the cash required to perform routine maintenance? What about the insurance, taxes and home owner’s association dues?
Let’s say the homeowner loses their job and falls behind on the mortgage payment. Without any skin in the game (down payment) the choice to walk away will be any easy one.
I read recently that we are becoming a nation of renters. There is nothing wrong with that. Just like there are people that aren’t cut out to be parents, or managers, or pilots, or scuba divers – there are plenty of people that have no business being homeowners.
The worst kind of candidate for homeownership is the broke kind.