Like many realtors throughout the country, I can now say that I'm "earning my stripes" as I've experienced my first downturn and am struggling to deal with a market that is trying to solidfy its bottom. I've witnessed so much government intervention the mortgage market that I've come to believe that following quote from Ronald Reagan is nothing short of biblical:
"In this present crisis, government is not the solution to our problem; government is the problem. From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else?" Ronaldus Maximus
Government (Fannae, Freddie) caused the bubble and its continued intervention (HAMP, Homebuyer's Tax Credit, government-enforced foreclosure moratoriums) is making the situation worse by continuing to keep the bottom as solid as quick-sand. Here are my suggestions to get the Real Estate Market moving the correct direction:
1. Eliminate the Mortgage Interest Deduction
The mortgage interest deduction, a "golden calf" of the Republican agenda, is not part of any true conseravative's dictionary. Veritably, this deduction is really part of the progressive, big-government agenda. Owning a home in America has enough intrinsic economic value that it can now do without government support (that's code-word for "enslavement"). Direct 100% of the associated tax revenues toward paying off the national debt by law because this now-uneccessary and fiscally-irresponsible deduction has contributed so much to growth of the debt.
2. Tuition Tax Credits for Private-Schoolers and Home-Schoolers
How about giving every parent with school-age children a rebate voucher for schools-tax portion of their property tax to be applied for successfully home-schooling or toward private school tuition? How about allowing those property tax-payers who don't have children in K - 12 to be able to earmark 50% of the schools-tax portion of their property tax bill toward a specific seat at a school or a specific child in need? What about those parents who rent? My solution is to allocate the property's rebate according to the number of bedrooms rented. Property values would sky-rocket because control over our wealth, or simply freedom, has more economic value to the public than any aspect of real property.
3. Means Testing for Public School Tuition
At the university level in the USA, a great portion of the financial aid is means-tested. It is a financial model that, for the most part, works well to provide world-renowned education to the masses. This is true capitalism at work; the distribution (rather than re-distribution) of charity efficienctly to those who need it most. Why not extend this model to K-12? Why not ask the wealthy to pay for their children's education? Why should the wealthy receive a benefit at the expense of the middle and low-income earners?
4. Eliminate HUD and Its FHA Insurance Program
Allocate 100% of the savings to the states based on their proportionality in the House of Representatives for them to provide housing aid at the discretion of the individual state's governments.
5. Means-Test the VA's Loan Guarantee Program
Direct 100% of the savings to the reduction of the national debt.
6. Long-term, i.e. 2013 or 2014, enact the Fair Tax which would:
a. eliminate all income-based personal and corporate taxes
b. provide a monthly-paid tax credit based on family size to head of every US-Citizen household
c. raise the dividend and long-term capital gains tax from 15 to 23% (paid at the point of consumption)
d. raise the death tax from 0 to 23% (paid at the point of consumption)
e. reduce all hidden and embedded taxes contained within the transaction of previously-owned real estate down to 0%.
f. other economic, privacy, and conservation benefits too numberous to list.
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