Population and Housing

[Joedelay Highhoe]

To bring this thread back to housing, I wondered what would happen to the housing market if:
1. All existing mortgages were canceled immediately and houses valued at whatever had been paid for in the mortgage to date.
2. All housing would be price restricted and only sellable for the equivalent of what the owners had paid for it in the first place, perhaps indexed to inflation.

The goal: allow homeowners to not still be paying off their mortgage in their retirement years.

The banks (and all securities that are invested in mortgages) would take a hit for sure, but the housing market would be cooled pretty quickly.

I realize that this would be a pretty heavy-handed way to cut house prices, but it was an interesting thought when considering that the vast majority of the housing stock that was built over the last 100 years is selling for prices well above what they might have been allowed to increase in value due to inflation.

That is a ridiculously generous handout to an already insanely privileged group in our society. If you own a home, you passed the stress test. If rates go up, you should be fine, even if your home price decreases for 5 straight years. You still have a place to live. Homeowners made the commitment to pay their mortgage, and they should be financially able to do so. If a homeowner can't pay their mortgage because they made a stupid purchase - that's on them. Sell the house and live somewhere you can afford.

Using public funds to pay-off reckless people's terrible purchasing decisions is an insane solution.