Someone at work pointed out a very interesting graph created by Robert J. Shiller, a Yale economist, comprising an index of American housing prices for the past 116 years. Click the graphic below to see the full-size image.

Housing costs

The black line tracks the resell price of existing homes since 1890, adjusted for inflation. Notice that since about 1997, the resell cost of homes has nearly doubled? Will we have a price correction like the ones after the booms in the ’70s and ’80s, or have we hit another plateau like the one after World War II? We are a more populous nation now than we were in the 1950s, but we also have 50 years of new home construction. So why the sudden ramp-up of housing costs?

Personally, I blame pump-and-dump schemes as espoused by people like Carleton Sheets. Sheets and others encourage people to jump into the housing market with no money down, then turn around and sell the property for more than their purchase price. Lather, rinse, and repeat, repeat, repeat. But what actual value is added to a property this way? Or is this just a way for people to make a quick buck by being middlemen? I think it’s all about the money, but I have long disliked these schemes.

Immanuel Kant developed a formula to determine whether or not any given action was moral or immoral. Here’s how Wikipedia defines it:

  1. Find the agent’s maxim. The maxim is an action paired with its motivation. Example: “I will lie for personal benefit.” Lying is the action, the motivation is to get what you desire. Paired together they form the maxim.
  2. Imagine a possible world in which everyone in a similar position to the real-world agent followed that maxim.
  3. Decide whether any contradictions or irrationalities arise in the possible world as a result of following the maxim.
  4. If a contradiction or irrationality arises, acting on that maxim is not allowed in the real world.
  5. If there is no contradiction, then acting on that maxim is permissible, and in some instances required.

To sum it up in simpler language, you must ask yourself the question, “How would the world be if everyone did what I’m thinking about doing?” If the world would be worse if everyone acted in a particular way, then that action is not moral; conversely, if the world would be better, then the action is moral and advisable. In the Wiki example, if everyone lied for personal benefit, the world would be worse since we couldn’t trust anyone, and our society runs on trust. So would the world be better if everyone engaged in pump-and-dump plans as espoused by Carleton Sheets? I say it would be worse since it would jack up housing prices to even greater heights, and it is hard enough already for people to break into the housing market for the first time. As long-time renters, my wife and I certainly don’t want home ownership to become any more difficult to attain.

Then again, I have to ask myself whether it’s even worthwhile to aspire to home ownership when some bureaucrat could take my real estate away on the slimmest pretext, thanks to the Supreme Court’s buttheaded ruling on Kelo vs. New London. If everyone were to use the Kelo decision to take people’s homes, the world definitely would be a worse place. Time for the Supreme Court to reread their Kant. And speaking of philosophers in general and Kant in particular, the following Monty Python song always pops into my mind. Warning: potty-mouthed Eric Idle about 60 seconds in.

All together now: “Iiiiiiiiiiiiiiiiiiiiimmanuel Kant was a real pissant…”