Friday, September 09, 2011

Why the President Hates Me

I actually watched the stimulus part 2 speech last night, and the president rubbed me the wrong way.  It wasn't the non sequitur's about construction in China and Korea being up (last I checked they weren't trillions of dollars in debt).  It wasn't even the non sequitur about bringing manufacturing jobs back to USA (I am not certain that our focus on college education jives with manufacturing jobs.  We have plenty of service industry jobs for people that don't go to college, and a good number of technical jobs for people willing to learn a trade.  The shortage of jobs seems to be in the area of college educated people, manufacturing and construction generally don't attract those people).  I have a job so the jobs stuff doesn't really catch my attention.  What does is housing. 

In his speech President Obama mentioned that we need to keep home values high.  Wait, what?  I used to own my home, so I feel that I can speak on keeping the value high.  I bought my home in TN where the bubble was late getting started.  I probably paid a little too much for my home.  When it came time to sell, my home had lost some of its value since I bought it 9 years earlier.  While I wasn't upside down, I had been trained to think of a home as an investment, which it is not, so I was disappointed that I didn't make any money on the sale.  After 9 years, we had barely dented our 30yr mortgage with no money down, our own faults really. 

I was never in danger of foreclosure, but even if I was having a higher home value wouldn't have reduced my mortgage payment.  Actually the opposite is true.  A higher value would affect the tax assessment therefore increasing the amount of taxes you pay on your home.  A lower home value can decrease your mortgage payment significantly, especially if you currently reside in New Hampshire.  Also, if you bought a house that you can afford and you don't have to move (I would guess this is most current home owners), you don't really care about the value of your house and you are still able to pay the same mortgage you always were.  While keeping the value high is reassuring it isn't really your largest concern. 

Now we come to the people that fall into my current boat.  People that have jobs and are renting trying to save for a house or even just a down payment.  Because of the Federal Reserve, our saving accounts only get about 1% interest (that is the highest I can currently find and not the norm.  So you can have $30,000 in savings and only make $300 a year in interest.  So, saving money in a savings account is practically stuffing it in a mattress.  People, like me, who want to become home owners can't save money and have a President that wants to keep us priced out of the market by artificially inflating the cost of owning a home. 

The only people that would profit from this, are people that are upside down or close to upside down and in danger of losing their home, people that are moving and have to sell, or *people that want home equity loans*.  I am not good at being subtle so the stars kind of give away the type of people I think this is aimed at.  Home equity loans propped up this economy for several years when people would use their homes as ATM machines to pay for cars, vacations, and flat screen TVs.  Our President isn't worried about people owning homes or paying a lower mortgage payment due to devaluation of the property.  He is worried about people going into debt (not unlike our government) in order to jump start the economy.  Yes, the President hates me. 


Alex J. Cavanaugh said...

You should write a letter!
Sorry, I missed the speech. Turned on the TV in time for football though.

SQT said...

Artificial manipulation of the market is what got us here in the first place. The massive recession was built on the housing bubble-- so the answer is to create another bubble? At the risk of offending those who feel otherwise, I happen to think this president doesn't understand economics at all. And really, isn't it patently obvious he's only attempting to address the economy now that he's in campaign mode?

We own a house and I don't particularly want its value to go down. That said, we can pay our mortgage (knock on wood) and the last thing I need is the federal government mucking around with the housing market-- or any other financial market for that matter. The inevitable outcome is that it will slow down a natural recovery. If people can't pay for a house they couldn't afford in the first place, then they should sell the house to someone who can afford to keep it. We're all better off that way.

M Pax said...

The state of things is alarming. We don't need any more bubbles. We need common sense and the government needs to quit being the puppets of the corporations.