Higher House Prices?

Josh Barro correctly jokes that the president wants what all Americans want, high prices for home sellers, and low ones for buyers.

But I can’t be more emphatic on how this issue can destroy the GOP, just as it has destroyed the Tories in the U.K. Increasingly the GOP is the party of families. That means many of its constituents own homes. Great. But it also means its future constituents want to own them, too.

My own home’s notional value increase in the last six years has illustrated to me how demented the housing market can become. I should be thrilled that, for a variety of reasons, my notional home value is going up. But I’m not. It doesn’t help me unless we stay in this house, and Americans continue to increase the ratio of income that they dedicate to home-buying. That’s a decent bet. But there are many ways this becomes a predicament.

One, if I found a great career opportunity, it would have to be not just a rung or two up the ladder to get me to move. All the other home values in places of opportunity have also gone up. And so have interest rates. The increased price of borrowing money alone would nullify most normal raises. Also, it simply pains me that when our Boomer neighbors do decide to downsize, my family members and longtime friends are priced out of a neighborhood they could have afforded just a few years ago.

We need to break the perception that a primary residence is an investment vehicle.