Monday, July 27, 2009

Sowell on Housing

Nick Schulz interviews economist Thomas Sowell about the housing boom and bust:

NS: Who should we feel most sorry for in the wake of the bust?

TS: The people I feel most sorry for in this whole episode are the people few express any concern about—the taxpayers, present and future, who will be forced to pay the price for decisions they had nothing to do with. Moreover, the thrust of the “affordable housing” crusade was not to reduce or eliminate the impediments that raised the cost of housing but to force banks and other lenders to finance home purchases at existing prices but on less stringent terms. The net result was a variety of “creative” financing schemes to lower monthly mortgage payments, if only temporarily—such as during the first two years of a 30-year mortgage—and to lend to people whose income and down payments did not meet the standards of conventional mortgage lending.

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