The end of the fixer-upper?
posted at 9:30 am on September 23, 2009 by Ed Morrissey
Much of the news about the cap-and-trade bill this month concerns the internal analysis done by the Obama administration but buried until a FOIA request forced its release showing that the cost per household for the bill would go higher that $1760 per year. But what happens when you want to sell your household? Ryan Young of CEI highlights a few more costly aspects of Waxman-Markey, which could end the fixer-upper market and make resales both more expensive and more difficult:
That bill contains 397 new regulations. One of them would affect almost everyone who buys or sells a home. If Waxman-Markey becomes law, homes for sale that qualify as “federally related transactions” — which is almost all of them — would be required to undergo an environmental inspection. …
Inspections are not free. Nor is fixing the inevitable violations. Compliance with new energy-efficiency standards would make homes, especially older ones, more expensive. Selling one’s home would become even harder than it already is in this down market if Waxman-Markey-style cap and trade becomes law. …
Suppose you have a window that isn’t quite airtight or your appliances are a little too old. Maybe they’re not Energy Star certified. You’d have to replace them before you would be allowed to sell your home.
The result could be the end of fixer-upper homes; surely, this is not what Congress has in mind. Some families prefer to buy a home in less-than-stellar condition on the cheap and make repairs and upgrades themselves.
For people who don’t have a lot of money, or who enjoy working with their hands, or who want to customize their home, this can be a very fulfilling path to homeownership. Waxman-Markey would take that away.
Most sales fall under “federal” transactions because of the involvement of the FHA, Fannie Mae, and/or Freddie Mac. That gives the federal government jurisdiction to create these prerequisites. The Obama administration and its liberal allies explicitly hail this as a means to whip us teenagers into green shape, but the result is more intrusion and the removal of economic choices from American lives.
Before now, the relative modernity of appliances mattered to just two people in a housing sale: the current owner and the bidder. Those who wanted more modern appliances either bought more expensive and newer housing, or bought fixer-uppers and used the cost savings to replace them. Now that latter option will become obsolete. Not too many people will pay to maintain their energy efficiency while not fixing other things around the house that more directly impact livability, such as flooring, painting, plumbing, and the like.
What about foreclosures? If people can’t sell when they get in financial trouble — because financial trouble usually means one cannot replace older appliances and windows — then we can expect to see foreclosures rise as people walk away. Will banks be able to sell foreclosures without a similar inspection? If not, then we can also expect to see lenders get a lot more particular about their borrowers. It’s bad enough to get stuck with a foreclosure, which are usually not in sellable shape even without worrying about the Green Police. And if banks get a pass, why should they get more privilege than a responsible homeowner does?
If one had to write a prescription for a housing-sector depression, imposing the Green Police on resales would be one of the most effective. It’s a ludicrous encroachment of the federal government into private transactions, and it would seriously wound an industry already reeling from the government interventions at Fannie and Freddie over the last ten years.