The President issued a report to Congress today, proposing a reform of "America’s Housing Finance Market" — specifically, a replacement of Fannie Mae and Freddie Mac.
What we’re not hearing (and what my partner pointed out to me years ago) is whether there is still a "national interest" that is served by home ownership.
We made it easier to buy and own your own home, through financing options, tax deductions, the GI bill, etc. Why did we do that? Apparently (though I don’t know the background) we believed that the nation would be a better nation if each family owned its own home.
Or maybe the finance industry, the housing industry and the construction industry just paid lots of money to politicians so that they could reap huge profits for the last 80 years. I really don’t know.
But it’s a question worth asking: Is there a national interest that is served by having people own their own homes?
If not, then we don’t need to keep encouraging this behavior. We can remove the government props, including FHA, Fannie, Freddie, tax deductions on mortgages, government-backed loans, and so on. We can let the market decide who gets a home and who lives with their parents and who rents.
If the government is going to be in this game, or if the government is going to get out of this game, there should be some discussion of why. And it isn’t because of the deficit. It is because it is the right thing to do — or not.
This question is asked directly in a blog posting of July 2010: "Why is home ownership the American dream?". Both the article and the comments to the post are instructive in opening up the basis for this widely-accepted belief. The blog also links to a report by the National Association of Realtors, extolling the social benefits of home ownership. Interestingly, a Google search on "social benefits of renting" turns up almost nothing. It is so ingrained in our thinking that home ownership is socially beneficial and renting is a sign of "social disorganization" that we struggle to find any benefit to renting.
The government policymakers are attacking the problem of Housing Finance as a budgetary, fiscal problem. It would be a sign of good government if they would first ask the question: Is home ownership a matter of national interest?