"McMinnville is being overrun by McMansions"
[ Jack Bog's Blog: Another one bites the dust ]

I tend to think that Alan Greenspan has something to do with it. The home building craze has its roots in the perceived desirability of stimulating the economy, in the short term, through fueling home building, which spreads money (Greenspan money) around to lots of people. (Greenspan is used here just as Pepsi, Coke and Pop, are interchangeable . . . perhaps Milton Friedman money would do just as well as a descriptor.)

The problem with building spec homes from a developer's perspective is how to unload the final product. The solution is to turn everybody into spec home buyers, flippers, both short term and longer term. The special capital gains treatment of residential homes have seen many adjustments to accommodate the plan for . . . for a sustainable bubble.

But homes for use as a residence are not a productive investment in the same way that a restaurant is or a warehouse near a navigable port, etc. Their value, for investment purposes, is limited to the ability to generate rent and where real estate investment could compete with other investments such as private equities based on comparisons of return on investment or market capitalization.

A farmer is left in the dust, literally, by the bubble brains because they cannot tap into the river of Greenspan cash except by abandoning farming to become builders or spec developers too. If you buy a home at two or three times its rent justified valuation, with Greenspan dollars, have you "invested" or have you instead become trapped in a scheme that makes you "dependent" on perpetuation of the bubble just so as to avoid a deficiency judgment to a bank (and Greenspan's Bubble Buddy Banks) for borrowed dollars.

It just continues to get more and more absurd as time goes on, quite the opposite of anything resembling sustainability, let alone sustainable farming.

How does someone need to respond to this abomination? By enacting anti-deficiency judgments.

See this: Public Records Request To Multnomah County
http://smf.pdxnag.com/index.php?topic=11.0

My comment over at Jack's goes like this:

Suppose that Oregon adopted anti-deficiency judgment legislation whereby Greenspan and his Bubble Buddy Banks assume all the risk of uncollectibility of loan amounts in excess of rent-justified valuations at the time of purchase? This might not stop the borrowers from borrowing but the lenders might think twice and it is more equitable between these two classes. It might also place a lid on the property tax assessments, which might displease folks in Oregon who are preoccupied with the focus on replacement revenues.

The principal determinant of the price-level of homes has transitioned to the price of money rather than income. Income has become just a factor in borrowing capacity. And yet we look at price-level as if it were indicators of wealth, rather than indicators of unsustainable levels of debt. I'll stick to my characterization of home owners, via debt, as glorified renters.

Sustainable farming? Absurd.