Is the Potential for A Fed Bailout A Good Thing?

There's a movement afoot to stop the government's bailout of the housing market and those institutions responsible for leading it to the brink and over the edge. Bloggers on websites such as NationalBubble.com, stand against possible legislation to accomplish just that.

I, for one, am against rewarding individuals and corporations for poor, if not downright unethical business practices, or simple ignorance and naiveté for that matter. However, the pragmatist in me recognizes the reasoning behind the potential bailout, simple supply and demand economics. People who are buying and selling houses take things out and put things into them. They shop. The money spent trickles into local retail, services and ultimately manufacturing. Given our propensity for national short term memory deficit disorder, who recalls how it was the booming housing market which helped stave off economic tepidity early in the decade after the calamitous impact of the 9/11 attacks?

Though I think the argument fair-minded and considerate of those who are not homeowners, a tone of entitlement pervades the chatter. When I was a young adult setting out to make my way in Los Angeles' television production industry, the notion of home ownership was so far beyond my grasp as to be incomprehensible. I and my peers were priced out of the market then…in 1984! I literally knew no-one my age who could afford to buy a home in greater L.A. It was not until I relocated the Seattle in the mid-nineties that it became a possibility. I bought my first at age thirty seven.

In these last four weeks, of the four homes I've sold, three have been for twenty or young thirty-something clients, one a mother of three who wishes to create stability for her children in a new neighborhood while putting her own financial stake in the ground. Two couples are setting out on building their lives together. The fourth transaction was for a baby boomer couple diversifying their retirement portfolio by making an investment in a rental property.

With each sale I am reminded there are competent, forward thinking people out there who are not buying into the national hysteria and backlash and who continue to recognize the value of responsible homeownership. If there is a change in the perspective of today's homebuyers, it is that they no longer view the purchase of any particular home as a lifelong commitment. Today, they are making a five-to-seven year investment in a property which will eventually be converted to something bigger, better or elsewhere. Making enough of a long term investment in real estate to ride out any cyclical waves remains an intelligent strategy.

The bailout is primarily for speculators, those lending institutions, developers, flippers, investors and ill-informed home buyers who thought the get-in-get-out strategy was a sure bet, with a few innocent caught in the middle. Should they be rewarded? No. Should smart, savvy homebuyers and sellers be penalized for the acts of the ill-advised and greedy? No. Should we let the entire thing go bust allowing the housing market to implode thoroughly so those who are currently priced out of their markets can then buy in, wiping out existing homeowner equity in the process? I don't think so. Should affordable housing be made available to those who may not otherwise be able to afford it? Certainly! The question remains, then, how do we accomplish it all?