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Thursday, August 25, 2011

Questioning Federal Homeownership Policy

“As a people we need, at all times, the encouragement of homeownership.” 
Herbert Hoover, 1932

“Owning a home can increase responsibility and stake out a man’s place in his community. The man who owns a home has something to be proud of and good reason to protect and preserve it.” 
Lyndon Johnson, 1968

“Owning a home lies at the heart of the American dream.”
George W. Bush, 2002

Objectives of current U.S. Housing Policy are to ensure a minimum level of housing quality; to increase the supply of housing by stimulating new construction, maintenance, and improvement of existing stock; to maintain incentives for savings and investment; to stabilize rents and asset prices; to reduce racial and economic segregation; to stabilize construction and business cycles; to reduce crowding; to foster community development; and to encourage homeownership.[i]

Federal government intervention to promote homeownership is justified on three grounds: (1) ownership creates positive public externalities, (2) low-income and minority households have inequitable access to ownership, and (3) owner-occupied housing is associated with the stability of the broader economy.

Each of these justifications can, and must, be examined critically: U.S. policy is based on the premise that everyone should be a homeowner, yet by so fervently praising the owned home, other types of housing are left unexplored.

Let me forward a question that the (brilliant) economist and New York Times op-ed columnist Paul Krugman posed in 2008:

Why should ever-increasing homeownership be a policy goal? How many people should own homes, anyway?[ii]

I would further Krugman’s questions by drawing upon those posed by Associate Professor and Chair of Policy Programs at the New School for Public Engagement Alex F. Schwartz’s:

What is the role of housing policy in promoting vibrant communities and the economic interests and social wellbeing of the population? And, based on how we answer that question, what are the relationships between housing policy and energy, transportation, education, and other national programmatic priorities?[iii]

I encourage you to read “Home Not-So-Sweet Home” by Paul Krugman—he is succinct and convincing in arguing what I think are very pertinent issues in U.S. housing policy... namely that ownership has become fetishized to a point that we've come to ignore some salient issues it begets, including financial risk, global warming, and inequality.  Senior fellow at the Peterson Institute for International Economics, Adam S. Posen has weighed in on this in a recent "Room for Debate" article in the New York Times Online"Problem: Home Ownership" is another recommended read. 

What are your thoughts? Do you agree with Krugman and Posen? Should homeownership receive less prominence in U.S. housing policy? Please share your musings below... 

Written by Marieke Van Der Steenhoven
University of Southern Maine, American and New England Studies

[i] Richard K Green and Stephen Malpezzi, A Primer on U.S. Housing Markets and Housing Policy (Washington DC: The Urban Institute Press, 2003): 85.
[ii] Paul Krugman, “Home Not-So-Sweet Home.” New York Times (June 23, 2008), http://www.nytimes.com/2008/06/23/opinion/23krugman.html (accessed December 10, 2010).
[iii] Alex F. Schwartz, Housing Policy in the United States: An Introduction (New York, NY: Routledge, 2006): 252.

1 comment:

  1. To bolster my argument about the U.S. housing policy's fetishization of ownership, just check out yesterday's article in the NYT about mortgage refinancing as a means to strengthen the housing market: http://www.nytimes.com/2011/08/25/business/economy/us-may-back-mortgage-refinancing-for-millions.html