Wednesday, October 15, 2008

Goldwater Institute: Prop 201 will prolong housing slump

By Byron Schlomach, Ph.D.

Arizona's housing market is in a down cycle and Proposition 201, the Homeowners' Bill of Rights, would likely worsen the situation..

Prop 201 would require ten-year home warranties on every new home sale. Buyers could also cancel a purchase deal more than three months after it's signed and get back 95 percent of any deposit. Prop 201 would also encourage lawsuit abuse because builders and homeowners would be required to pay all legal fees, even if a lawsuit was found to be frivolous, and it eliminates alternative dispute resolution options.

All of these measures would add uncertainty for new home builders and current homeowners. Builders would have to insure themselves to cover the lengthened warranty period, to insure themselves against buyers who re-neg, and to insure against litigation sure to be spurred by the creation of these new rights. That means home prices would increase right in the midst of a down market.

Migration to Arizona has fallen as people around the nation are having a harder time selling their homes. Making homes in Arizona more expensive will only make the problem worse and further weaken our economy.

Byron Schlomach, Ph.D, is director of economic policy at the Goldwater Institute.

Learn more: Proposition 201

Phoenix Business Journal: Fewer people moving to Arizona, real estate market top culprit

Arizona Real Estate Notebook: Phoenix Case-Shiller Home Price Indices

1 comment:

Unknown said...

The Goldwater Institute is right again. This initiative looked like a good idea at first glance -- then I realized it forced everyone to give a ten year warranty and forced litigation. What happened to the free market. If someone wants a 10 year warranty, they should have a chance to buy one. Everyone doesn't want one, and I definatley wouldn't want to pay the price of a 10 year warranty on my home. More government at a higher price to consumers. . .I'm out on that.

At least the opponents of the initiative have a sense of humor about it. ..take a look . .

Funny and true.