(c) by Mark Dempsey
As a former Realtor, I was disturbed to read Tamara Suminski's, Sacramento Bee editorial (1/30/26 "California leaders can expand homeownership opportunities. Here's How"). She's President of the California Association of Realtors. In it, she promotes the "abundance" talking points, saying taxes and frivolous litigation are among the biggest obstacles to home ownership. As is common, the omissions are more important than the points she makes.
She makes no mention of the fact that, as of 2024, one in six homes purchased in the United States was bought by investment buyers and speculators, more than triple the number in 2000. In low-price homes, investment buyers bought one in four. Philip Pilkington says, "Housing in America is being treated as a financial asset from which investors extract wealth—this is not unlike how land and property were treated in the feudal era."
Ms. Suminski also ignores the fact that there are more vacant homes than our current, record-breaking homeless population, the biggest since the Great Depression. San Francisco has five times its homeless population in vacant homes.
Vancouver, Canada, had an epidemic of speculator-owned vacant homes, too. This reduced the supply of homes available for purchase, making home prices increase. Vancouver had some success keeping prices reasonable by by taxing vacant property, a measure that discouraged the speculators. Is there any discussion of that in the current housing "debate"? Nope. Taxes are always a problem, never a remedy. And rent control? Why that's completely taboo!
The home ownership problem comes down to affordability. Banks are partly responsible for the prices increasing. They love making homes ever more expensive, and, as the subprime/derivatives meltdown in 2007-8 proves, they will even accept fraudulent appraisals if it means they can make bigger loans. For banks, bigger mortgages mean bigger profits! Meanwhile, government financing underwriters and insurers (VA, FHA, FNMA, FHLMC) and the Federal Reserve, our central bank, do relatively little to penalize misbehaving banks. Instead, they excuse and bail them out.
Public policy matters when it comes to affordable housing, too. Nixon stopped the federal government from building affordable housing, and, as he was cutting taxes on the wealthy roughly in half, Reagan cut HUD's affordable housing budget by 75%. Clinton signed legislation with the Faircloth amendment, placing an upper limit on federal affordable housing programs. The attack on affordable housing has been a generations-long, bipartisan project.
Meanwhile, public policy was responsible for the possibility of home ownership in the modern era. The New Deal popularized 30-year mortgages and the FHA, a mortgage insurer that made such long-term mortgages safe for banks. More recently, government agencies like FNMA and GNMA have bought mortgages from the banks that originated them, creating a secondary market to encourage even more home-purchase lending.
Ms. Suminski says that housing is "the most reliable engine of generational wealth...Over the past 33 years, California homeowners built approximately $165,000 in household net worth per capita..." This ignores the previous observation that "Housing in America is being treated as a financial asset from which investors extract wealth," and the fact that most of that "wealth" accrues in making housing unaffordable.
But did homeowners really build wealth with their homes? Never mind that the figure Ms. Suminski quoted favors the most expensive homes, not affordable ones; nobody "built" their equity. They passively let the asset inflation that has accompanied the financialization of the economy's productive activity do it for them.
Such "wealth" is the definition of "economic rent," that is, money paid for nothing productive. Adam Smith observed that the wealthy feudal landowners who collect rent make money in their sleep. Home appreciation didn't create any new land, and didn't necessarily mean the homes were improved. Thanks to such omissions, the entire housing "debate" looks like Trump's declaration that he's going to make sure present homeowners keep the high values of their houses, while he'll make the homes more affordable.
In related news, gambling is currently the second fastest-growing sector of the economy--an activity Warren Buffett called "a tax on ignorance." And ignorance sure looks like it's in the driver's seat when it comes to housing policy.
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The author was a Realtor for more than a decade and a half, appraising property and representing those buying and selling it.
Update 2/22/26:
