I would be curious to see analysis for what home prices would be with 0 Fed intervention.
It is an interesting thought experiment. From what I've gathered, any intervention by the government to make housing more accessible, just gets priced in pretty quickly, removing the benefit.
For example, FHA offering 5% down payments instead of a standard 20%, just means every first time buyer can now pay 15% more (approximately) for a house. In hot markets, the prices rise quickly to reflect that and everyone is in the same position as before.
It obviously benefits buyers in non-hot markets. It's pretty nice to put $7500 down in the mid-west for a house.
I assume that without any federal intervention, the housing prices would be as accessible as they are today, prices would just be lower so that that the same number of people could afford 20% down and 5-year term mortgages with the resulting interest rate risk.
It is an interesting thought experiment. From what I've gathered, any intervention by the government to make housing more accessible, just gets priced in pretty quickly, removing the benefit.
For example, FHA offering 5% down payments instead of a standard 20%, just means every first time buyer can now pay 15% more (approximately) for a house. In hot markets, the prices rise quickly to reflect that and everyone is in the same position as before.
It obviously benefits buyers in non-hot markets. It's pretty nice to put $7500 down in the mid-west for a house.
I assume that without any federal intervention, the housing prices would be as accessible as they are today, prices would just be lower so that that the same number of people could afford 20% down and 5-year term mortgages with the resulting interest rate risk.