Real Estate
The Problem
Over the past decade California has seen very large fluctuations in real estate values. Unfortunately when prices were high the government initiated unsustainable spending policies tied to a surplus of property tax revenues. When the real estate market began to turn down and foreclosures rose, the tax revenues began to decrease and huge budget deficits ensued. Now our government is struggling to find new ways to make up for this loss of property tax revenue with higher income and sales taxes.
Additionally the decreased real estate values exposed the high risk gambles by our nations investment banking sector. As prices tumbled, highly leveraged banks were wiped out overnight as margin calls and a declining asset base exposed the poor lending practices by all of our nations financial institutions.
This was bad enough, then the government allowed our courts to exacerbate the problem by cutting off the water supplies to income producing properties and family farms. As valuable farmland was turned into desert, additional downward pressure increased on an already declining market.
Finally, as a slap in the face to homeowners across the land, the government used trillions in taxpayer funds to bailout the banks but leave all of the debt on the backs of the people. This lack of common sense must stop.
Our leaders in Sacramento and Washington love to point fingers but inept government policies created the entire debacle. It is time for the politicians to stop blaming those who were victimized in this crisis and started recognizing their own responsibility for this problem.
The Solution
We must stop allowing the government to interfere with our free markets. All attempts by our government to subvert our free market economy have been a dismal failure. We cannot give failure another chance to fail.
First, we need to restore value back to our agricultural properties by restoring their water rights. This is a very simple solution that requires no new debt just political will. The misguided policies of extreme environmentalism are destroying our freedoms and our wealth. This is not just about the fish, it is about the people. The water restrictions are causing real estate to decline all across the state. As farmland becomes worthless surrounding properties also lose value.
Second, we must stop bailing out banks that make bad loans. This policy does not help the value of our real estate, it just makes things worse as taxpayers are now forced to pay for the losses. If our financial institutions are let off the hook they will not develop proper lending practices and more foreclosures will be the inevitable result. No one thought that the easy credit policies would cause real estate to decline in value, but when the foreclosures increased this is exactly what happened. Now, with values 30% to 50% below the peak, there is no equity to loan against and credit has dried up as it is difficult to qualify even with the lowest interest rates in history.
Third, we must cut government spending. As the government continues to borrow and spend it dominates the credit markets making less capital available for the private sector. Consumers and businesses struggle for limited resources as the government takes a bigger share of funds available to lend. Real Estate declined rapidly when the credit markets dried up. Now that credit markets have stabilized, the government is taking too much away from the public with its so called stimulus programs that are financed with massive amounts of debt. It is imperative that we reduce government borrowing so that more credit can be made available to the general public.
If you want to see real estate values rise again, then vote for me in the Republican Primary on June 8, 2010. I will stop the endless policies of borrow and spend by our government that have weakened our credit markets and saddled the taxpayers with unnecessary debt.
