Homeownership -- and its incentives -- debated
The housing bubble was the ultimate expression, and perhaps the last gasp, of an economic system some 80 years in the making, and now well past its “sell-by” date. The bubble encouraged massive, unsustainable growth in places where land was cheap and the real-estate economy dominant. It encouraged low-density sprawl, which is ill-fitted to a creative, postindustrial economy. And not least, it created a workforce too often stuck in place ...
The solution begins with the removal of homeownership from its long-privileged place at the center of the U.S. economy. Substantial incentives for homeownership (from tax breaks to artificially low mortgage-interest rates) distort demand, encouraging people to buy bigger houses than they otherwise would. That means less spending on medical technology, or software, or alternative energy—the sectors and products that could drive U.S. growth and exports in the coming years. Artificial demand for bigger houses also skews residential patterns, leading to excessive low-density suburban growth. The measures that prop up this demand should be eliminated.
If anything, our government policies should encourage renting, not buying.
As it happens, UMBC professor Thomas F. Schaller pokes the mortgage interest deduction in an opinion piece in The Baltimore Sun today:
Unlike rent subsidies for the poor or seniors, we tend not to call this form of redistribution "welfare." But in the broadest sense, it is a form of welfare that largely benefits middle- and upper-class Americans, including this columnist.
Crises always prompt rethinking about the way we do things. Are you doing anything differently? What if anything should the country change?