Cato's Mark Calabria argues that increasing debt loads haven't done much to increase homeownership:


I think the spread of 30-year self-amortizing mortgages after World War II obviously did boost the homeownership rate substantially, but that after that, the best you can say is that it was a long run for a short slide--it took a lot of extra debt to produce a modest boost in homeownership rates. (Though be careful of that last set of bars--they're going to be affected by the fact that so many people who used to have equity in their homes, no longer do.

But of course, at this point, homeownership isn't really the point for either politicians or their constituents.  Even though we're planning to pay off our mortgage early, we have a continued interest in the mortgage interest tax deduction--because if it goes away, the value of our home will fall.  Without a tax deduction to ease the burden of their mortgage payments, prospective buyers won't be willing to pay as much.

Now, I favor the elimination of the mortgage interest tax deduction anyway.  But I'm a crazy ideologue who values intellectual consistency above my personal financial interest.  This does not describe all that many people in this country, most of whom haven't even spent enough time thinking about the issue to develop opinions they could be consistent about.  So I'm betting the mortgage interest deduction, and all the other subtle prods towards loading up on mortgage debt, are probably here to stay.

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