In the Name of "Affordable Housing"
By Arnold Kling
Greg Mankiw prints some notes from Philip Swagel from last week’s conference on the future of housing finance.
Conference participants from industries involved with the financing and construction of homes assert that no American will ever buy a home again if the government does not provide a full credit guarantee against the financial market consequences of people defaulting on their mortgages. And that guarantee needs a fair (that is, low) price.
To the limited extent that advocates of affordable/low-income housing participated in the conference, they vehemently opposed scaling back any form of government support
(if you follow the link to Swagel’s own proposal, know that I strongly disagree with it.)
Pretty much every policy undertaken in the name of “affordable housing” does little or nothing to help the intended beneficiaries. Instead, these policies have major adverse unintended consequences and persist because of the large rents they give to industry participants. If there were any justice in the world, anyone who came to this sort of conference and uttered the words “affordable housing” would have their clothing instantly disappear and be replaced by a huge sandwich-board sign that says, “I shamelessly exploit sympathy directed toward poor people for my own profit and self-aggrandizement.”