Essentially, housing prices have hugely inflated (in much of the developed world) because demand is much higher than supply. Prices in the real-estate market are generally really reactive to changes in supply or demand because each ‘product’ is unique and limited, as well as being worth a lot of money so there is more pressure to maximize the potential gains.
This sort of plan increases the resources available to the demand side without increasing the supply side. This drives up prices since there are more potential buyers.
Anyone who couldn’t buy a house without such a program is being added the the pool of people competing for a limited supply of houses. It won’t increase supply because supply is heavily limited by other factors, most notably zoning.
It’s unfortunate, because the thought behind such a policy is admirable. It’s trying to make buying a house more fair and more easily achievable for a broad segment of the population that currently is effectively shut out from owning a home.
The current administration is already doing most of the things regulation wise. Its just not catchy or easy to understand like the down payment assistance part.
The changes the Biden administration has made and is making will take time, houses can’t be built overnight, but the down payment assistance helps now.
In my opinion, its only a bad policy if we choose to allow it to be.
Sure, here’s a paper which explores the effects.
Essentially, housing prices have hugely inflated (in much of the developed world) because demand is much higher than supply. Prices in the real-estate market are generally really reactive to changes in supply or demand because each ‘product’ is unique and limited, as well as being worth a lot of money so there is more pressure to maximize the potential gains.
This sort of plan increases the resources available to the demand side without increasing the supply side. This drives up prices since there are more potential buyers.
Anyone who couldn’t buy a house without such a program is being added the the pool of people competing for a limited supply of houses. It won’t increase supply because supply is heavily limited by other factors, most notably zoning.
It’s unfortunate, because the thought behind such a policy is admirable. It’s trying to make buying a house more fair and more easily achievable for a broad segment of the population that currently is effectively shut out from owning a home.
The current administration is already doing most of the things regulation wise. Its just not catchy or easy to understand like the down payment assistance part.
The changes the Biden administration has made and is making will take time, houses can’t be built overnight, but the down payment assistance helps now.
In my opinion, its only a bad policy if we choose to allow it to be.