The overall economy is a mess, unemployment is through the roof, and a true recovery is nowhere in sight. The reality is that the housing market, construction, and related services comprise one of the largest segments of our overall economy. If we want to have a true economic recovery and bring down unemployment - the housing markets must be fixed first!
So how do we solve the housing crisis and fix our overall economy?
It goes back to supply and demand. Prices will stabilize when supply and demand return to a state of equilibrium. Prices will begin rising again when and if we can increase demand past the point of supply.
There are two simple cures for solving the ills in our housing markets, - actually three.
However, the third cure;as simple as it may, be involves burning down about four million housing units and thereby bringing supply and demand back into equilibrium by drastically reducing the housing stock. Yes it would work, home prices would come back up and it would probably be a lot of fun. (Just think of all the great block parties) But not the most practical of ideas in the long run…
There are however two very practical and inexpensive ways to restore the housing markets that are so dragging down our economy. Although both are quite practical – one will be quite unpopular with a lot of folks in this country, even though it really makes the most sense and not only will not cost us poor overburdened taxpayers any more money, it will actually generate additional tax revenue.
We’ll start with that one and it is very simple. First, Illegal Alien Amnesty - that’s right – we have somewhere between 40-50 million illegal aliens living in this country, who work here, enjoy the benefits that your and my tax dollars pay for (schools, hospitals, roads, police and fire protection, etc.) yet pay nothing in taxes and give nothing back.
Why don’t we just make them all citizens and let them pay taxes like the rest of us? If we can “spread the wealth” – why can’t we also “spread the burden”?
Before I go on here, I should mention that I am in no way a bleeding heart liberal, in reality I am an ultra-conservative, bordering on social Darwinism. To put it bluntly I considered Ronald Reagan to be too liberal..
It is not about politics - it is simply time for a reality check. Most illegal immigrants are not illegal by choice, but by nature of our immigration policies. Most would be thrilled to be able to call themselves Americans. Most would be more than happy to pay their taxes, vote in our elections, and I am sure many would even be prepared for military service if it meant they could become citizens.
In as much as some all bitch and moan about the illegals in this country, let’s be real here as well, they are already here, they are going to be here, so we might as well accept that fact and let them start paying for the services that they are already using. Again most of them would be quite happy and proud to do so.
I am not going to get into a long running debate about this as it is not the point of this article.
The subject here is how to fix the crisis in the housing markets.
The fact is that if we were to create an illegal alien amnesty program nearly half of those in that category would opt for citizenship. So with that said, an illegal alien amnesty would mostly likely create about twenty million new Americans.
More importantly one of the most common dreams and aspirations of all “new” Americans is home ownership. The “American” dream is still alive and well with those folks – they just don’t happen to be Americans… yet.
If we created twenty million “new” Americans – at least 25%-30% of them would be able to buy a home within a relatively short period of time – perhaps one to two years. That would be 5-7 million new “qualified” homebuyers entering the marketplace. More than enough to mop up the excess homes inventory in the marketplace and restore values. If we restored values – we wouldn’t have so many foreclosures and if we stopped having so many foreclosures we could stop spending billions of dollars bailing out banks!
Even more importantly these would be owner-occupant homebuyers, the kind of buyers that preserve, restore, and invest in our neighborhoods – not the investors that so often destroy neighborhoods and values.
Not only that – but all of us as taxpayers would receive a secondary benefit as well. Now that we have made them all citizens, we can also share one of our other beloved American Holidays with them as well – April 15th! Now all of these new Americans can start paying their fair share as well.
Politics and all other arguments aside, this is probably the simplest and most effective policy that could be implemented to restore the housing markets and help restore our economy.
This has been practical option number 1. In part 3 of this article we will discuss another option that will likely prove a bit more popular and in effect would likely be easier to implement.
Mike Krein
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