We learned last week that U.S. housing prices have fallen more than they did during the Great Depression. This is particularly devastating to the GLBT home-owning communities of California, Florida, New York, Nevada and many other states that Obama needs to carry in his re-election bid next year.
As the Wall Street Journal reported, home prices have dropped 33 percent since 2006, compared with a 31 percent decline in the 1930s. The values of bottom-tier homes have fallen a disastrous 63 percent.
Nationally, this means home prices have crashed to the levels they were at in mid-2002—nearly a decade ago—while homes in many American cities, including Atlanta, Detroit, and Las Vegas, are now selling below their price levels in January 2000. Last week’s report from Standard & Poor’s warned that there is “no relief in sight” for this free-fall in prices. It will be a difficult task for Gay Democrats to cover up this painful reality as they mobilize for Obama.
In the middle of the worst economic crisis since the Great Depression, Washington should have done everything possible to stabilize the housing market and the economy. Instead, President Obama and Democrats in Congress took the opportunity to pass the Dodd-Frank Act, sweeping regulation of one-sixth of the economy that promises to make the crash in home prices even worse. Moreover, Barney Frank is a member of the GLBT community and that is further salt in the wounds of mortgage owners.
Dodd-Frank gives the federal government the authority to deem certain institutions “systemically important” to the financial system, and thereby subject them to unique regulations at the arbitrary discretion of the Federal Reserve and executive branch. These institutions could include banks, insurance companies, and other large financial firms.
Although the Administration claimed that Dodd-Frank abolished “too big to fail,” it in effect will do the opposite, creating a class of financial institutions that have the government’s implicit backing and guarantee – potentially giving these firms an unfair advantage over competitors and even opening the possibility that the government could dictate decision-making at these firms. In essense, all Americans — gay and straight — are massively subsidizing the rich while Obama distracts us with “tax the rich” rhetoric and causes home values to plumment..
The cost of compliance with the Dodd-Frank Act’s hundreds of pages of regulations, as well new ones from the CFPB, will weigh significantly on large institutions and disproportionately on small ones. The mandates the law contains pose an existential threat to community banks, which will struggle to comply with the requirement to hold more capital and the onslaught of additional rules. The law is already killing community banks and crippling loans to small businesses and homeowners.
Dodd-Frank is terrible for the housing market, which is dependent on the very lenders for whom Democrats have chosen to raise costs and uncertainty. The result is the worst drop in home values since the Great Depression.
This is a tragedy for the millions of Gay Americans whose homes are now worth less than what they paid for them just a few years ago, and for the millions more whose houses make up a large portion of their net worth. Even the most responsible homeowners are seeing their money evaporate in a housing market distorted by bad government policy.
