Housing realism: The government can't fix it

Many public servants want to “help fix” the housing “crisis.” Their do-good-ism stems from a misunderstanding. They erroneously believe government's job is to fix people's problems. But government's role is to protect people's rights.

People's problems are their own to solve, with the help of loved ones, churches, charities and others acting voluntarily – not with government's coercive redistribution of other people's money.

Happily, the Los Angeles Times reports the latest congressional scheme to bail out people who borrowed more money than they could afford to pay back is suffering from public-opinion backlash. “There is no sympathy for anything that smacks of bailout,” said Allen Sinai, chief economist of Decision Economist Inc. “The outrage has shown up very quickly.”

The public is smarter than its elected representatives, and perhaps the press, too. The Times reported we're in the midst of “the worst housing crisis in a generation.” Such hyperbole must be tempered with realism. This generation has seen housing sales reach record highs, at record prices, bringing homeownership to greater numbers of Americans than ever.

In columnist John Stossel's words, “are we really experiencing a mortgage-default ‘crisis'? No.” A mortgage bankers' fourth-quarter survey showed foreclosures at only 2.04 percent of all mortgages, many of them speculators, not lost dream houses. “[L]et's keep things in perspective,” says Stossel. “Ninety-eight percent of borrowers are not in foreclosure. Only a small percentage of them are even late in payments.”
“Why,” Stossel asks, “call that a ‘crisis'?”

Here's why: Bloated government's misguided problem-solving approach, rather than a rights-protecting approach, continually seeks problems to fix, always paying with other people's money.

The Times lamented the consequences should “government fail to act.” We celebrate government succeeding by not acting. Markets self-correct. People who make bad decisions, take risky gambles or seek easy profits suffer appropriate consequences. Self-correcting benefits already are evident as new home sales tick upward, and foreclosed homes are being purchased at more realistic prices by people who can afford them. Things return to normal, without government's “help.”

The Orange County Register