From the Right



Beware the Popping of the Housing Bubble

Stephen Moore on

If this housing run-up were simply a result of natural supply and demand market forces, there wouldn't be a great cause for concern.

Alas, Congress, the Fed and housing agencies such as Fannie Mae are pumping air into the bubble. The Fed has artificially held interest rates too low for too long as part of its "stimulus" strategy. Meanwhile, the Fed has encouraged home loans by purchasing $2.7 trillion of mortgage-backed securities, and they are held on the central bank's balance sheet. That's precisely what it did in the early 2000s.

Congress has been passing out hundreds of billions for taxpayer-funded rental and mortgage assistance, propping up housing.

Meanwhile, Fannie Mae, the federal guarantor of trillions of dollars of mortgages, is now insuring mortgages of more than $1 million. This program was supposed to help lower-income and first-time homebuyers. Now, millionaires are getting subsidized loans thanks to the tremendous power of the housing lobby made up of realtors, mortgage bankers and homebuilders.

If and when the bubble bursts again, everyone gets hurt. Homeownership rates will crash again -- which is the opposite of the desired result from all of these government programs.


These are the laws of unintended consequences that Congress never learns.


Stephen Moore is a senior fellow at Freedom Works. He is also author of the new book: "Govzilla: How The Relentless Growth of Government Is Devouring Our Economy." To find out more about Stephen Moore and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at

Copyright 2022 Creators Syndicate Inc.


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