How to fix the housing crisis

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ds's picture
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How to fix the housing crisis

try to watch the whole thing.

cannotaffordit's picture
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Re: How to fix the housing crisis

I'll be most interested in Chris' take on this.  And, if it's a good as it looks, we need some way to get this plan to somebody who can do something about it in Wash D.C.     BTW, who is this guy who came up with this idea?

krogoth's picture
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One big problem

One big problem is that the majority these ARM's were done in a non-traditional and illegal fashion. For example, credit checks, falsification of information, modifications or seconds to get the loan, no down payment etc. etc.

So, my point is, why would he state in this presentation that no credit or job check would be done with this plan? Is that not the reason we are in this mess? Because these homeowners could not get financing if we followed traditional, legal methods and credit checks? Because they could not get fixed rate loans because of credit problems was very common, so they went to the ARM's and falsified information on a huge scale.

If you do this, is it a possibly that you are just prolonging the problem considering most of these ARM's were not affordable even before the rate's went up for the homeowner? Also, with job losses continuing to rise, to not put in something as simple like a rudimentary basic credit check, bank check, job check, credit score is not acceptable.

This solution will only buy some time for the mortgage holder, not solve the crisis. If it hits a 20% effective level of success, I would be surprised.

TimesAwasting's picture
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Re: How to fix the housing crisis

The plan the guy in the video is alluding to is called a "streamline" FHA refinance. I believe the only requirement's are an updated appraisal and a 12 month payment history of not more than one "30 day" late payment. It's actually a pretty good program... the guy is definitely on to something!

Jantjedeman's picture
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Re: How to fix the housing crisis

It is more simple:

 The price tags on the houses are not realistic. For years, it looked like houses were much more of a value than the money it took to build them. Also the ground on which those houses were built was getting more expensive and expensive.

This does not make sense.

This are must be pushed out of the bubble.

 No financial trick will help. 

Damnthematrix's picture
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Joined: Aug 10 2008
Posts: 3998
more failures of market forces

Home Rule

Posted January 3, 2011

Here’s the remarkable, hidden truth about our housing crisis.


By George Monbiot, published in the Guardian 4th January 2010.

There are two housing crises in Britain. One of them is obvious and familiar: the walloping shortfall in supply. Households are forming at roughly twice the rate at which new homes are being built(1). In England alone, 650,000 homes are classed as overcrowded(2). Many other people are desperate to move into their own places, but find themselves stuck. Yet the new homes the government says we need - 5.8m by 2033(3) - threaten to mash our landscapes and overload the environment.

The other crisis is scarcely mentioned. I stumbled across it while researching last week’s column, buried on page 33 of a government document about another issue(4). It’s growing even faster than the first crisis - at a rate that’s hard to comprehend. Yet you’ll seldom hear a squeak about it in the press, in parliament, in government departments or even in the voluntary sector. Given its political sensitivity, perhaps that’s not surprising.

The issue is surplus housing: the remarkable growth of space that people don’t need. Between 2003 and 2008 (the latest available figures), there was a 45% increase in the number of under-occupied homes in England(5). The definition of under-occupied varies, but it usually means that households have at least two bedrooms more than they require(6). This category now accounts for over half the homes in which single people live, and almost a quarter of those used by larger households(7). Nearly 8 million homes - 37% of the total housing stock - are officially under-occupied(8).

The only occasions on which you’ll hear politicians talk about it is when they’re referring to public housing. Many local authorities are trying to encourage their tenants to move into smaller homes. But public and social housing account for only 11% of the problem(9). The government reports that the rise in under-occupation “is entirely due to a large increase within the owner-occupied sector”(10). Nearly half of England’s private home owners are now knocking around in more space than they need(11).

Why is this happening? I’ve spent the past few days wading through official figures to try to find out. None of the most obvious explanations appear to fit.

While the proportion of homes occupied by just one person rose sharply between 1961 and 2001, since then there has been no increase(12). The formation of single households can’t account for the growth in under-occupancy between 2003 and 2008. The proportion of couples without children has also remained stable since 2001(13). Fertility rates have increased over this period - from 1.63 babies per woman in 2001 to 1.96 in 2009 - so a general absence of children doesn’t explain it either(14). Nor can it be blamed on the elderly: except through devastating war, no population can age by 45% in six years. The divorce rate fell in 2008 to its lowest level since 1979(15). Marriage has declined(16), but cohabitation has risen(17). The overall rate of household formation rose only slightly during the period in which under-occupancy has boomed(18).

This appears to leave just one likely explanation: money. My guess, though I can find no research or figures either to support or disprove it, is that the richest third of the population has discovered that it can spread its wings. A report by the International Longevity Centre comes to the same conclusion: “wealth … is the key factor in whether or not we choose to occupy more housing space than is essential”(19).

While most houses are privately owned, the total housing stock is a common resource. Either we ensure that it is used wisely and fairly, or we allow its distribution to become the starkest expression of inequality. The UK appears to have chosen the second option. We have allowed the market and the market alone to decide who gets what, which means that families in desperate need of bigger homes are crammed together in squalid conditions, while those who have more space than they know what to do with face neither economic nor social pressure to downsize.

The only answer anyone is prepared to mention is more building: let the rich occupy as much space they wish, and solve the problem by dumping it on the environment, which means - of course - on everyone. I think there’s a better way.

While reducing under-occupancy can’t solve the crisis of provision by itself, and there will still be a need for new construction, a better distribution of the housing we’ve built already would help to relieve the pressure on both people and places. First we need to see the problem. I suggest a new concept: housing footprints. Your housing footprint is the number of bedrooms divided by the number of people in the household. Like ecological footprints, it reminds us that the resource is finite, and that if some people take more than they need, others are left with less than they need.

The next step is to reverse the UK’s daft fiscal incentive to under-occupy your home. If you live by yourself, regardless of the size of your property, you get a 25% council tax discount(20). The rest of us, in other words, subsidise wealthy single people who want to keep their spare rooms empty. Those who use more than their fair share should pay for the privilege, with a big tax penalty for under-occupation. If it prompts them either to take on a lodger or to move into a smaller home in a lower tax band, so much the better.

I would also like to see an expansion of the Homeshare scheme, which could address several growing problems at once. Instead of paying rent, lodgers, who are vetted and checked by the charity which runs the project, help elderly home-owners with shopping, cleaning, cooking, gardening or driving(21,22). Typically they agree to spend ten hours a week helping out, and to sleep in the house for at least six nights out of seven. This helps older people to stay in their own homes and lead an independent life, gives them companionship and security and relieves some of the pressure on social services and carers. It provides homes for people who wouldn’t otherwise be able to afford them.

But we can’t solve this problem unless we start to discuss it. It needs to be researched, debated, fought over. It needs to turn political. I can understand why neither the government nor the oppostition dares to think about it: none of the major parties wants to pick a fight with wealthy householders. So it’s up to us to give them no choice, by turning under-occupation into an issue they can’t avoid. It cannot be left to the market, as the market works for the rich.


1. The government says that 118,000 new homes were built in 2009. The total addition to the housing stock was 129,000 homes. It projects an average annual increase in the number of households between 2008 and 2033 of 232,000. DCLG, 2nd December 2010. Housing and Planning Statistics 2010.

2. Department for Communities and Local Government, 2nd December 2010. Housing and Planning Statistics 2010.

3. As above.

4. Office for National Statistics and Department of Energy and Climate Change, 2010. Annual Report on Fuel Poverty Statistics 2010.

5. As above, page 33.

6. You can find a fuller definition here:
Ed Harding, July 2007. Older People’s Housing and Under-Occupancy, page 4. International Longevity Centre.

7. Office for National Statistics and Department of Energy and Climate Change, 2010. Annual Report on Fuel Poverty Statistics 2010, page 33.

8. Department for Communities and Local Government, October 2010. English Housing Survey: Household report 2008–09, Page 27.

9. As above, page 27.

10. Department for Communities and Local Government, September 2009. Fifteen years of the Survey of English Housing: 1993 – 94 to 2007– 08, page 6.

11. Department for Communities and Local Government, October 2010, as above, Page 27.

12. Office for National Statistics, 4th December 2009. Households and families.

13. As above.

14. Office for National Statistics, 21st July 2010. Births and Deaths in England and Wales

15. Office for National Statistics, 28th January 2010. Divorces.

16. Office for National Statistics, 11th February 2010. Marriages.

17. Office for National Statistics, Summer 2009. Estimating the cohabiting population. Population Trends 136.

18. Department for Communities and Local Government, September 2009. As above, Chart 18, p24.

19. Ed Harding, July 2007. Older People’s Housing and Under-Occupancy. International Longevity Centre.

20. Directgov, no date given. Council Tax discounts, exemptions and financial help.



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