Why Homeownership?


Well, obviously, there are a lot of reasons a person might want to own a home. The question is less why would one want to own a home than why the country has so much public policy aimed specifically at encouraging homeownership. Roger Lowenstein's New York Times Magazine article on the housing market doesn't directly address this point, and neither does the chart from that article that I've reproduced to the left. Still, look at the chart.

The highest homeownership rates are in West Virginia, Michigan, Delaware, and Mississippi. I couldn't say for certain, especially since I don't know much about Delaware, but the common factor here seems to be economic stagnation leading to relatively low housing costs plus relatively small numbers of new people moving to the state. Now, it'd be dumb to say that high levels of home ownership are making Mississippi so poor (try history) or causing Michigan's current economic woes (try to auto industry) but it does seem to indicate that boosting homeownership rates doesn't produce any miraculous consequences.

If we didn't subsidize howmownership, people would own less home and own more stocks and bonds instead. Some of that owning "less home" would come from people renting rather than buying, and some would come from buyers simply buying smaller houses. That's be good for the environment, and more capital would be available for business operating in non-housing sectors. Meanwhile, I feel like if we weren't specifically encouraging an ideology of home ownership ("American dream" and all that), you might get less of the risky behavior that seems to be causing trouble of late. I feel like there are a lot of people who would never dream of doing something so exotic as margin trading who've been basically willing to do the same thing with their investment in the housing market. If anything, it seems to me that we should be work at the margin to discourage people from treating their homes as speculative investment commodities.