As I've been posting the last couple of days about the housing bubble and potential problems in certain markets, an ominous thought occurred to me.
I'm pretty optimistic about the housing market; I've said that, even if your property values plummet, you've still got your house and you still get to live in it and ride out the storm until property values rise again.
But do you remember this story? (I'm sure you do; in fact, I hope you never forget it.) It's my post about the Kelo v. New London case, where the Supreme Court bungled their responsibility to protect us from the excesses of government and handed every small municipality in America the right to seize private land for other private, commercial use, in the name of increasing tax revenues.
I know this story is a month old, and other bloggers have probably already covered it from every angle, but it's just so appalling, and it gets to the heart of my current concern. The city of New London is charging the displaced homeowners back rent, because they claim the litigants lived on city land for the duration of the lawsuit. As my friend Shaun says, the New London city hall is "filled with corrupt people with hearts made of black pitch." True. (I say we carve into their chests and find out what their hearts look like...)
And you can look all over the net for other examples of local governments taking advantage of their new SCOTUS-granted power to take private property.
See, one of the very few weak, feeble arguments the very few proponents of the Supreme Court's decision in Kelo v. New London make is, well, they pay the people for the land. When eminent domain comes to use and abuse you, at least it leaves the money on the nightstand. They even pay "fair market value," whatever that is.
But what if these same exploitive, greedy, hearts-of-pitch government officials start taking advantage of bursting housing bubbles to seize your land after the property values bottom out? They can claim they're paying you "fair market value" when they take your land to hand it to Costco or Lowe's, but you'd still be losing tens of thousands of dollars or more. That's why you have to have control over when you sell your land, as well as whether or not you do so.
When it comes to the City of New London's land grab, I never thought they had a single solitary argument that was intellectually or ethically defensible. And the state of our real estate markets make the whole practive of eminent domain even more potentially insidious.