This seems to be a corner for "professional economists", I am not one. But I am 79 years old and have been in the business community since I was 20. I was VP of a building company until the mid 80s during which time we build about 10,000 homes. My part among other things was to manage selling homes with a 12 % interest rate in a 16% market. Sep 81 the US $100,000 long bond sold for as low as $64,375. We were perhaps the first building company to sell the loans at a diffierent time than we sold the houses. All of our home sales were based on fully amortized loans over a fixed period, mostly 30 years and mostly VA and FHA loans. No such thing as a free lunch at that time but the real problem began with the Great Society with LBJ. The most dangerous seed planted was by HUD, a FHA 235 i loan program that in the early 1970s gave credit to the additional dependents (expanded families) and even allowed the total cash investment of $200 be paid by Welfare ( State or Fed). A new 1200 sq ft home sold for $21,500 with 8% interest, however HUD paid 7 of the 8% interest leaving a total monthly cash payment of abouot $125.00. Such a home would have rented for about $200 per month. A new home for less than paying rent. What were the results of this great experiment??? By the way that same house was worth about $250,000 in California in 2006. The results were so bad it is difficult to find the statistics. My real estate company brokered 170. After 5 years only 10 of the original buyers owned the houses, 1 had sold and the rest were foreclosed and the loss covered by FHA insurance. Something for nothing is worth nothing.
That was the accelerating point of US governments attempt to buy votes by giving people a house they did not earn.
Most of the home loans being foreclosed included one or more automobiles, one or more credit limit credit card payoffs. Sometimes the family refinanced and sometimes they bought a new home, while keeping the old one as a rental. The 2 together did not have a payment equal to the fully amortized cost at real interest rates of even one.
Americans will feel better about themselves when the castle they have was earned by themselves. Most are so confused by professional economists manuevering the view of what happened they are in hibernation.
Last short story. In 1956 I purchased my first home, a new 1080 sq ft 3 bdrm 1 1/2 bath home. $1000 cash $8800 GI loan payable @$56.83 PITI. That home was selling for $300,000 in 2006. 360 X $56.83= $20,459 plus new roofs and other maintenance and improvements including interest of about $15,000 +$20459+$1,000= $36,459. Which means in 2006 I could have a reverse mortgage paying me about $3,500 / month for life. Something for nothing created by our economic system. No buyer of a home in California in the last 60 years that paid the monthly payments to payoff ever paid one penny rent to live in that home.
How can an economic system that pretends to give free rent for life plus a free retirement survive???????????
I am not proud of the problem we have handed our posterity.