The Attack on Homeownership
Certain aspects of the attack are not, strictly speaking, against homeownership itself. Rather, they are arguments from principle against government policies that promote homeownership. These are principled arguments in the sense that they derive from beliefs that oppose all government attempts to influence any of our choices. Thus, Watkins and Brook write, "A government crusade to promote homeownership is un-American." "In America, the government’s job is to protect our freedom to pursue our values, not to dictate what our values are. Its homeownership policy should be the same as its toaster oven policy: laissez-faire."
Others may not in general oppose government intervention and attempts to influence our choices, but they suggest that, in the particular case of promoting homeownership, the cost to government is simply too high. Kiviat says that the mortgage interest deduction "cost the government some $80 billion in lost revenue in 2009." Samuelson estimates, "Tax breaks (mainly the deductions for mortgage interest and property taxes, plus preferential treatment of capital gains on homes) exceeded $120 billion in 2009."
Of course these figures may amount to chump change in the context of the multi-trillion dollar estimates regarding the cost of bailouts and the "stimulus". Moreover, the "lost revenues" attributed to tax-advantaged housing may well be offset by the variety of positive social outcomes (e.g. lower crime rates) that have been attributed to neighborhoods with high ownership rates.
Perhaps the wildest attack comes in the Time Magazine article by Kiviat: "The dark side of homeownership is now all too apparent: foreclosures and walkaways, neighborhoods plagued by abandoned properties and plummeting home values, a nation in which families have $6 trillion less in housing wealth than they did just three years ago." But she is mistaken. All those regrettable events were not caused by homeownership; they were caused by foolishly-easy credit and by reckless lending programs.
In August of 2010 the National Association of Realtors® (NAR) released a paper entitled "Social Benefits of Homeownership and Stable Housing". The timeliness of this document was probably not coincidental. The paper is a "review [of] existing academic literature that documents the social benefits of homeownership." There is not room here to recount the detail, but the study concludes "…there is evidence from numerous studies that attest to the benefits accruing to many segments of society. Homeownership boosts the educational performance of children, induces higher participation in civic and volunteering activity, improves health care outcomes, lowers crime rates and lessens welfare dependency." "Public policy makers would be wise to consider the immense social benefits of homeownership for families, local communities, and the nation."
The NAR study is clear that the social benefits of homeownership are tied to stability (the lack of high turnover in neighborhoods). But Kiviat, in the Time Magazine article, even questions the value of that. "Homeownership may provide a sense of stability to families, but stability in today’s economy isn’t always a virtue." She quotes economist Andrew Oswald, "The economy is changing all the time, and we need people to be mobile in order to drop into the right job slots."
What to make of all this? Well, I don’t think homeownership is about to be banned. But you can sure expect to see some chipping away at its tax advantages as the government tries to figure out how it’s going to get out of the financial hole that has been dug. There will be a lot of economic arguments.
Can we put a value on homeownership? Ironically, the best answer may be contained in an anecdote that appears in the Time article. Kiviat writes, "Star Korajkic, one of America’s newest homeowners, doesn’t particularly care about all this [financial] history. What she cares about is being able to paint her daughter’s room purple without asking anyone’s permission."
And what is the value of that? Priceless.
Published: September 21, 2010
