Like It Or Not Politics Impact Home Values

My neighbor stopped by the other day, a young fellow who while a homeowner is not yet savvy to the web of money and real estate and what I call the myth of appreciation.  I know, it sounds like sacrilege for a Realtor to speak against appreciation.  You will always get the unvarnished truth from us at the Fine Homes Team.

Housing Market a Complicated Mix

Housing Market a Complicated Mix

While home prices may increase 3.5% over a year, let’s say 2011; what happened with inflation?  I’m not talking about the fake number supplied and manipulated by the current regime, I’m talking about the real number that you and I and millions of Americans see every time we go to buy groceries, fuel or clothing.  If inflation is at a 10% rate, and home prices increased by 3.5% there is no real appreciation.  While it might look like appreciation, it ain’t folks.

Add to this the idea that if you buy a 1 ounce .9999 Silver Canadian 1812 coin today for $31.51 USD, it may or may not be worth $31.51 USD tomorrow.  There was a day when you could buy a mens suit for a $20 Gold Piece USD.  The $20 Gold Piece is now worth about $1680.96.  My point is that the gold and silver did not go up in value, they stayed the same.  What changed in value was the US Dollar.  So if you bought your home for $200,000 in 1990 and it is worth $300,000 today did you make money on it?

It has been said that elected officials are out of touch with real America, the 99% who are not crazy wealthy.  It appears true when you read the article below published by the Heritage Foundation today.  Elections have consequences.  If you own a home look for the guy or gal who will starve the beast that is consuming your equity.

All across America, families are balancing their budgets and even paying off debt. Since the financial panic of 2008, personal debt has fallen as Americans tighten their belts and pay back loans. Some, unfortunately, had to declare bankruptcy because their debts got too big. Washington cannot declare bankruptcy; it must instead follow the example of millions of Americans and cut spending to live within its means.

Most state governments, likewise, have managed to balance their budgets, even during these hard times. A few states, notably California and Illinois, continue to follow the federal government’s profligate example. A few raised taxes to get their fiscal houses in order, but most simply reduced spending. Several very large states with financial challenges, like Texas and Florida, balanced their budgets without any income tax at all by reducing spending. They are showing the way.

Hey Mister, got a nut you can  spare?

Hey Mister, got a nut you can spare?

Washington could use the guidance. President Obama promised to cut the annual deficit in half in his first term. Instead, his budgets include near-trillion-dollar deficits as far as the eye can see. Unlike most state governments, and unlike America’s families, President Obama has to this point refused to do the serious work of cutting spending.

>>> Why the debt limit must be used to force a balanced budget

Incredibly, the “fiscal cliff” deal actually increased spending on net by $47 billion, while simultaneously letting 13 new or higher taxes take effect. The President also called for a “balanced” approach. So far he’s 0 for 2—no halving the deficit and no balance.

The next opportunity to focus Washington’s attention is the debt ceiling, which we hit last month. Treasury is now using some extraordinary tools to keep paying bills, but this likely won’t last beyond February. So something has to happen. But what should happen?

Would you give your spendthrift teenager a higher limit on his credit card if he did not have a plan to live within his means? No way! Instead of helping, you’d be giving that irresponsible teen more borrowed money to spend, making his situation worse.

The same principle applies to our nation’s credit card, which boys and girls of tomorrow will have to pay off. Increasing the debt limit without a credible path to balancing the budget puts off needed spending discipline and pushes us toward national ruin.

A truly balanced plan would lead to a balanced budget. The debt ceiling—if not raised—would force the federal government to operate on a balanced budget overnight. This approach could lead to unorganized cuts as the executive branch decided which bills to pay and not to pay, which of course is not ideal. (Congress could help by passing a prioritization bill in case we need it). Under a new law, or even without one, the Treasury would undoubtedly have enough money to pay our interest expense, avoiding a default on our debt.

Increasing the debt ceiling without reforms would be an unfortunate step toward a Greece-like meltdown at some point. Thankfully, the debt ceiling debate gives Washington policymakers a chance to get to much happier outcome: a balanced budget over time.

While our debt situation is dire, to this point our federal government has been able to use deficit financing because, as bad as things are here, they are better and more stable than in many parts of the world. It also helps in marketing our debt that the Federal Reserve is buying so much in a largely fruitless attempt to stimulate the economy. Regardless, we have a short window of opportunity to get our house in order before credit markets demand severe austerity.

Benjamin Franklin once said, “Never leave that till tomorrow which you can do today.” That’s why Congress should not raise the debt ceiling unless it includes immediate reforms today that put us on a sure path to balance, keep us in balance over time, provide for the common defense—and do not raise taxes.

There are a number of ways the budget could be balanced in short order. The Heritage Foundation put forward a plan that achieves balance in less than 10 years. Senator Mike Lee (R-UT) sponsored that plan in a budget debate last year that also included plans from Senators Rand Paul (R-KY) and Pat Toomey (R-PA), both of which led to balance. None of them raised taxes. The House-passed Paul Ryan (R-WI) budget led to balance much later, but at least it was on the right path.

In contrast, liberals in Congress and the executive branch have not produced a single budget blueprint that balances within 10 years—or ever. For a President who likes to talk about a “balanced approach,” none of his proposals achieves the most important balance: spending only what you take in in revenue. That’s real balance.

Conservatives in the House and Senate are right to not raise the debt ceiling unless it includes reforms that put us on a path to balance within 10 years and keep us balanced. To do anything else would be abetting Washington’s massive overspending habit.

Derrick Morgan is vice president for domestic and economic policy at The Heritage Foundation.

Quick Hits:

  • A conservative coalition is calling for Congress to balance the budget. Heritage Action’s Michael Needham, the Family Research Council’s Tony Perkins, and Club for Growth’s Chris Chocola make the case in this morning’s Politico. Join the coalition and tweet this
  • President Obama will announce his gun control proposals today, including more than a dozen executive orders. The White House is bringing in children for the announcement who wrote letters to the President after the Newtown shooting.
  • The White House has quadrupled the number of signatures required on “We the People” petitions to get an official response.
  • Tune in online to Istook Live!, the radio show broadcasting from The Heritage Foundation every weekday morning from 9 a.m. to noon ET.
  • Yesterday, the U.S. House approved $50.5 billion in relief for Hurricane Sandy over the objection of conservatives. Check out our video and tweet it.

About FineHomesDigest

The Fine Homes Team, Mark Finchem, Associate Broker with Long Realty Company, provides service to buyers, seller and builders where fine homes are concerned. With extensive experience in residential real estate transactions we can help you with the home you'd rather have.
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