It was one of those news items I filed away in my memory bank, with a mental note to keep my eye out for refutation of the premise being reported.
Well, here's the refutation.
Once again, the pointy-headed do-gooders are set to tinker with the free market in the name of combatting - wait for it - raaaacism!
The home-valuation industry has become the federal government’s latest target for a massive and unjustified power grab. Unless stopped, the government, not markets, will set home prices, which could have catastrophic consequences.
To justify its takeover, the government is trying to scapegoat the appraisal industry—which is 97% white, 70% male and not well-organized—for having caused large disparities in racial wealth and homeownership. Cue last week’s report from the Interagency Task Force on Property Appraisal and Valuation Equity, or PAVE, led by Housing and Urban Development Secretary Marcia Fudge and the director of the president’s Domestic Policy Council, Susan Rice, which asserted the existence of “inequities within current home lending and appraisal processes” for communities of color.
The justification for this inequities-for-communities-of-color is beyond flimsy:
The government’s case is unsubstantiated. The PAVE report relied on three pieces of research. The first one was a blog post by the Federal Housing Finance Agency, which quoted 16 examples of racially charged language out of millions of appraiser reports but refused to disclose the total number of occurrences. The second was what Freddie Mac—one of the two mortgage giants—called “exploratory research” that was later directly contradicted by a report from the other giant, Fannie Mae. The third was a report by the Brookings Institution, which boldly claimed that 23 variables could completely account for all possible non-race-based factors affecting a home’s value. This left only racial bias as the explanation for the remaining value differences between white and black neighborhoods, which research we did for the American Enterprise Institute thoroughly discredits.
PAVE’s blatant disregard of pertinent research, use of cherry-picked data and discredited research lead it to flawed conclusions. This suggests either a lack of interest in getting to the truth or, more likely, that the report is only a pretext for centralizing valuation regulation under a new Federal Valuation Agency.
Here we go again. Centralizing regulation under a new federal agency.
And all because the overlords are determined that we all get our minds right about race. Never mind that behaviors that anybody of any race can engage in are the main determinant of how nice a home he or she can buy.
More-rigorous research shows that rather than being the fault of the appraisal industry, the racial homeownership disparity exists because of the failure of past efforts on welfare, school quality, crime, urban renewal or public housing by the federal government to address differences in socioeconomic status. The data clearly show that Americans with higher income and who are married have higher homeownership rates regardless of race. When they were of similar socioeconomic status, black, white and Hispanic households all had similar outcomes when we replicated the Brookings and Freddie studies.
We don’t dispute a legacy of past racism and lingering racial bias, which leaves blacks at a large income and wealth disadvantage, but history shows that government attempts to solve socioeconomic gaps through housing policy often backfire.
Examples abound, but consider these two. The 1967 Presidential Task Force on Housing and Urban Development proposed a 10-year housing program to eliminate all substandard housing in the U.S. It ended up destroying many American cities through a combination of lax lending to underqualified borrowers, careless government oversight (particularly in appraisals), and predatory business arrangements between the Federal Housing Administration and lenders. In the end, these actions wreaked havoc on black households and neighborhoods.
Or consider HUD’s 1995 National Homeownership Strategy, designed to achieve a homeownership rate well in excess of any in the nation’s history. The housing boom it unleashed went bust, leading to more than 10 million foreclosures and costing taxpayers dearly. Black homeowners and neighborhoods were among the hardest hit.
And also once again, distortions in the free market are going to sock the demographic ostensibly in need of policy rectification the hardest.
If home prices were no longer determined by markets but instead by a politicized valuation process, it is easy to see how the results could exacerbate racial and ethnic disparities in wealth and homeownership. The politicization of home prices to address perceived valuation inequities could lead to misvaluations on a massive scale. The areas most affected would be minority and rural areas, where home sales generally are sparser. This could engender even larger home price peaks and troughs, ultimately hurting lower-income households, which have the least wherewithal to withstand price declines.
Don't expect anybody in the current administration to give a flying diddly about the points made here.
This has the same odor wafting off of it that two other recent acts of grandstanding have had: this newly passed Emmett Till law, which addresses lynching, a form of murder for which there have been state laws on the books for years, and, more to the point, has not been an issue in our country for over half a century, and Biden's plan to come after rich people's unrealized capital gains.
This is why, even though it's still as important as ever to wrest real conservatism away from the clutches of Trumpism, it's equally important to defend the principles that serve as the foundation of that real conservatism.
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