January 16, 2013
Federal Involvement in Real Estate — It’s Big!
SmartGrowth America has issued an interesting report, Federal Involvement in Real Estate: A Call for Examination, which provides a high level summary of the topic. While it does not contain any surprises, it is somewhat shocking to see the range of budget and tax expenditures all laid out in one document. The report states, “While $450 billion was the average amount directly committed to real estate each fiscal year by the federal government, the government’s impact goes even further. This figure does not include the obligations of GSEs Fannie Mae and Freddie Mac, which exceed $5.5 trillion in outstanding loans and loan guarantees.” (4, footnote omitted)
The report makes the obvious point, “Though many think of the United States as a free market economy, real estate is greatly influenced by government policies.” (6) While obvious, it bears repeating often and loudly whether one is a free marketeer who would like to reduce the government role in real estate or a proponent of the welfare state who would like to see government resources directed more rationally.
The reports key points include, among others, the fact that federal housing policy favors homeowners over renters, single-family homes over multifamilies, vacation homeowners and upper-income households. (6-8)
Last point: Appendix B has an interesting table that compares total single-family and multifamily expenditures from 2007 through 2011. it comes out to about $606 billion for the former and $227 billion for the latter, nearly a 3-1 ratio. (17)
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