Real Estate Follies

I began writing about the Recession of 2026 back in 2021; you have been warned, at least if you’re a long-term reader. There is further evidence of the kind of financial irresponsibility which the late Professor Mason Gaffney described as characteristic of a bubble in land prices, although please remember that the bubble in land prices is the basic issue. Trump has proposed 50-year mortgages, so that people who can’t afford the payments on a 30-year mortgage will have their chance to buy overpriced land, and be left holding the bag when the crash comes. That isn’t how he put it, and I don’t think that that’s what he intends, but results don’t always care about intentions.

And now there’s an article in Reason reporting that Fannie Mae will remove the minimum credit score requirement of 620 for a mortgage that Fannie Mae will buy, enabling the financially unstable to participate in the bubble. I do take issue with the article title, “The Trump Administration’s Latest Housing ‘Fix’ Could Inflate Another Bubble.” More precisely, it could further inflate the land price bubble which we already have, leading to a yet worse crash when the bubble finally bursts.

I’ve been trying to tell the world. Georgists, especially Georgist economists like Mason Gaffney and Fred Foldvary, understand some things which the rest of the world does not.