Editor: David Reiss
Brooklyn Law School

May 1, 2013

Disney-fied Homeownership Policy

By David Reiss

The Census Bureau just released a report indicating that the homeownership rate is 65 percent, which is its lowest in since 1995. (5)  While some will greet this news with dismay, it provides an opportunity to ask — what are we trying to do with homeownership policy anyway?  For the longest time, both Democratic and Republican Administrations acted as if more homeownership was always better.  More recently, commentators on the Left and Right have begun to question that unthinking devotion to such a goal.

I have previously argued that federal housing policy should work toward ensuring that all Americans live in a safe, well-maintained and affordable housing unit.  Note that such a goal does not require homeownership, just a home.  For too long rental housing, which is more appropriate for all sorts of people, has been treated as the Cinderella of housing, with all the perks (for example, the mortgage interest deduction and property tax deduction) going to single family homeowners (Drizella?) and owners of coop and condo units (Anastasia?).

Politicians make all sorts of claims about the benefits of homeownership to justify this special treatment for the mostly upper-middle class households that benefit from these perks.  After our experience with the Boom and Bust of the 2000s, the financial benefits of homeownership must be evaluated with the financial risks that it poses in mind as well as its upside.

There is also a significant amount of scholarship that argues that there are a range of non-economic benefits that result from homeownership. Supposed benefits include better outcomes for homeowners and their families in education, health and employment. The supposed benefits also include increased civic engagement, as demonstrated through higher levels of volunteerism and participation in community activities. Homeownership policy is thereby often justified by the claim that it helps to achieve better outcomes for residents regarding these non-economic benefits. But the connection between homeownership and these benefits has not been clearly demonstrated.

The bottom line:  let’s develop a housing — not homeownership — policy that would make old Walt proud. That would be one where everyone can live stably ever after in a “castle” of their own, not just the upper middle class homeowners who get a bunch of tax breaks for living in a big, expensive house.

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