The Benefits of Subprime Loans: Homeownership Back to 2000 Levels
Remember how Congress and former Federal Reserve Chairman Alan Greenspan refused to regulate subprime loans, and joined the mortgage industry in defending them as a way to extend the benefits of homeownership to all? Turns out it was all for nothing, really. New Census figures out today show home ownership rates returning to their levels of eight years ago, before the housing boom took off and anyone with a pulse qualified for a mortgage, Calculated Risk says:
So much for the homeownership gains of the last 8+ years. Gone.
Specifically, Census figures show home ownership rates in the fourth quarter of 2008 declining to 67.5 percent, about the same level as in late 2000.
So. Given all the foreclosures, the failed banks, the sinking economy, the falling living standards, the neighborhood blight and upheaval, the unhinged financial industry and a severe recession… I think it’s safe to say subprime loans such as pay day loans really weren’t worth all the trouble after all. We had eight years of highs and lows in the housing market, and all we’ve gotten from it is a return to where we started.
The subprime boom never led to a picket fence and front porch that most people could live in for the long term. If these figures show anything, it’s that subprime lending was all just about the money, the profits from high-rate loans, and nothing more. Now we’re living with the consequences, and we’ll be doing so for a long time to come.