What A Home Is Worth
Christopher Papagianis and Reihan Salam pick apart our housing policy:
From 1994 to 2005, the homeownership rate reached record highs, thanks largely to innovations in the mortgage-finance market that reduced down payments and minimized equity ... One effect was to reduce the social benefits of homeownership, because the benefits are a product of equity and not of the mere fact that a contract has been signed and a mortgage taken out. The relationship between homeownership and social goods had been misunderstood: The traits that enabled households to build up the savings necessary for significant down payments hard work and the deferral of gratification were misattributed to homeownership itself. Paying a mortgage did nothing to improve children’s educational outcomes; instead, the factors that gave rise to homeownership also led parents to raise children in a manner that led to greater educational attainment.
Without substantial down payments and conservative amortization schedules, the entire proposition of homeownership as a social good is turned on its head.
(Photoshop fail via BF)