There’s a decent editorial in today’s Seattle Times: Wages stick to the floor.
While I strongly sympathize with the difficulty that middle-class people have buying homes in King County, subsidizing middle-income housing just makes no sense…
…the tax burden for subsidizing middle-class housing would be borne mostly by the middle class.
In addition, subsidizing middle-class housing will not help the market readjust. The fact is, if middle-class people cannot afford middle-class homes, [it’s because] they are overpriced. This is the result of deregulation of the mortgage industry, which allowed people to pay more for homes than they could actually afford.
If we subsidize the cost of homes, this will mean that the value of homes will never readjust, and the portion of the cost of the home that is subsidized will be invisible to the market. (This is what happened to the cost of college when students could borrow unlimited money.)
Finally, subsidizing middle-class homes will not force wages to adjust to the real needs of working-class people. This is the real issue. Working-class people need to earn a decent living to afford a home, health care, saving for retirement and college for their kids.
While I don’t necessarily agree with everything Ms. Orth suggests, her point that subsidizing the purchase of overpriced homes is counter-productive is 100% correct, in my opinion. The fact that the middle class in Seattle has been priced out of prudent home ownership is unfortunate and unpleasant, but it’s a problem that most government intervention will only exacerbate.
(Maggie Orth, Seattle Times, 11.10.2007)