Reading an op-ed piece by James A. Wilcox in the New York Times yesterday, I was struck by the novelty of his ideas for what amounts to government-backed insurance against a loss in home equity.
But the more I read the column by the respected economist, a business professor at the University of California, Berkeley, the more dubious I became. He writes:
Down-payment protection would provide a sensible and affordable way to restore confidence.
He contends that a large number — perhaps two million — of potential buyers who are renting or living with relatives hesitate to take the risk of making a purchase even if they have good jobs and credit histories. Says he:
While near-record numbers of houses all over the country are empty, the sidelines are crowded with this huge ‘shadow demand.’
His solution for activating that demand, whatever its dimensions, would be Continue reading