The legal process of buying a house has been made so complicated that you have to hire a licensed professional who has taken a course on real estate laws to help you buy your home. During the process of buying a house your real estate agent will introduce you to a long line of fees that you won’t understand, don’t agree with, and in many cases, are completely unnecessary. You’ll be forced to lock in an interest rate that changes daily for no other reason than it can. By the time you close the deal on your house you’ll have signed so many papers your hand will hurt.
The justification for all of this is to protect you, but after all the charges have been tallied up, your 30 year mortgage will cost you twice the price your house was advertised at, but you won’t know that until after your charismatic real estate agent has made your head spin with 300 pages of legal jargon and schmoozed you into signing your future away so they can get their cut of the closing costs.
The justification for charging you twice what your house is worth is because the bank takes a risk. That excuse is overdramatized to the point of being a lie. In fact, the more your bank overcharges you and the less upfront it is about those charges the more likely you are to default on your loan. Your lending institution will also deflect the blame by saying a lot of the cost is taxes, which only proves the government is complicit in overcharging you for your house. The government doesn’t have to tax you to death on your home. It doesn’t have to make it hard for your family to own your own house. They just do it because that’s the way it’s always been done, and the reason it’s always been done like that it because there’s money to be made in it.
The immediate consequences of this system are obvious: home buyers get screwed out of their money and are set up to default on their loans, but the problem is worse than that. Since there’s so much money to be made selling overpriced houses to suckers, the rich (who can build houses cheaply or buy existing ones with cash so they don’t get screwed on a 30 year mortgage) have a lot of incentive to buy up as much land as they can and build houses as cheaply as possible. This results in cities full of dilapidated houses that require constant repairs being sold at astronomical prices.
If it weren’t so easy to screw over the little guy, property values wouldn’t be so inflated. If property values weren’t so inflated people could afford to pay off their houses and wouldn’t default on their loans. Then lending institutions would not go bankrupt, and governments wouldn’t have to “bail out” lending institutions.
But the system is designed to screw over the little guy, and that causes housing bubbles, which result in millions of people losing their homes and even more never being able to buy one in the first place. And even after the American tax payers bailed out the lending institutions that screwed them in the first place…the process of buying a house is still exactly the same as it was before. The little guy is still getting systematically ripped off in the exact same ways, and the consequences will continue to remain the same until the fundamentals of the housing market are changed.
If the government was the sole lending institution through which all property purchases were financed it could set low, stable interest rates and eliminate all the predatory fees banks throw into the process just because they can. If the government collected the interest on housing loans it wouldn’t need to impose such oppressive property taxes on home owners. Those taxes could be slashed or eliminated, increasing the working class’s ability to pay off their mortgages. Real estate agents could still assist home buyers, but they should have a fixed wage set, say $1000 per house. Period. This is a generous sum of money for what’s often less than a week’s worth of work, and it doesn’t incentivize overpricing houses to pump up the realtor’s commission. Building codes should have higher standards. This won’t lower the cost to buy a house, but it will lower the cost to maintain a house, which will increase the likelihood that a home buyer will be able to pay off their mortgage in the long run.
Finally, how much land does one person need? Why does one person need to own 10,000 acres? The more land one person owns the less land there is for everyone else. You can argue that everyone has a right to own as much land as they want, but when there’s no land left for the poor, the effect is the same as denying the poor the right to own land. If a law were put in place limiting the amount of land someone can own or the frequency with which they could flip their property it would prevent housing bubbles. This would kill the big business surrounding the housing market, but that business needs to be killed. It doesn’t benefit society in any way. It’s a drain on society, and when you consider that every dollar a home buyer spends on their mortgage is equal to time spent at work, you ultimately pay for your house with your life. As it stands, the exploitative nature of the housing market steals people’s short, irreplaceable lives. I won’t hesitate to say that it’s a crime against humanity. If all of this money weren’t tied up in the fake fees business it could be released into the economy to stimulate actual businesses that have a real world benefit to humanity.
But your dearly beloved politicians aren’t talking about that, and they’re not going to, and you should be asking why.
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