In praise of the mortgage 'crisis'

Writes Paul Thornton in Reason:

In their concerted attempt to "keep Americans in their homes," Clinton, Obama, and McCain have called for the federal government to spend billions of dollars to curtail foreclosures and shield Americans from the consequences of their own risky investment decisions. Makes you think the candidates are on your side.

Not if you’re a renter. Foreclosures boost the supply of housing at a faster than expected clip. With supply for potential buyers (i.e., renters) increasing, home prices stand to fall (albeit modestly) to less insane levels, particularly in overheated areas such as Southern California, the region I call home. That increasing supply of housing and those lower prices could be why a Zogby poll released in April showed that, despite the economy’s tailspin, most Americans think now is a good time to buy a home.

It's true. The combination of falling prices, low interest rates and foreclosures (read: rock-bottom deals) of houses purchased by dummies who reached far beyond what they can afford has created perhaps the best-ever moment to become a homeowner for those with some savings, ambition and fiscal discipline.

The Standard & Poor's/Case-Shiller national home price index fell 14.1% (PDF) between the first quarter compared of 2007 and the first quarter of 2008. For anybody with a little sense, that's not tragedy; it's opportunity.

People bitching and moaning about the "mortgage crisis" are the sort of folks who felt slighted when the value of their dot-com stock didn't continue soaring into the stratosphere. They bet on a bubble and it popped. That's life. The feds didn't compensate folks for all that Confederate money ... err ... those Pets.com shares, and they shouldn't bail out folks caught up in the recent real estate madness.

If you're a renter who wants to make the jump to ownership, go for it. It won't get any better than it is now.