The City Journal, a quarterly must-read urban affairs journal published a terrific article on the cycle of Washington’s efforts to encourage homeownership called Obsessive Housing Disorder by Steven Malanga.
The author suggests our troubles began in the 1922 with Herbert Hoover’s Own Your Own Home Campaign and was seen in nearly all of the following decades.
The author suggests it’s based on an unsubstantiated political premise without empirical data – a “cliche of political discourse” that:
Homeowners make better citizens.
As a result, homeownership continues to be pushed and the view is myopic:
In December, the New York Times published a 5,100-word article charging that the Bush administration’s housing policies had “stoked” the foreclosure crisis—and thus the financial meltdown. By pushing for lax lending standards, encouraging government enterprises to make mortgages more available, and leaning on private lenders to come up with innovative ways to lend to ever more Americans—using “the mighty muscle of the federal government,” as the president himself put it—Bush had lured millions of people into bad mortgages that they ultimately couldn’t afford, the Times said.
When I think back to our recent housing boom and the mantra of Fannie Mae and the former administration, we paid a significant price for a 5% boost in homeownership from 64% to 69% in a decade. The resulting economic damage render moot the effort – we got the ownership numbers boosted through artificial financial means.
Although I tend to believe that owner occupied housing is better cared for by its occupants (speaking as a former renter), I had never considered the idea of history repeating itself in this economic sector, in such a specific way.
A good read.
UPDATE: Another excellent article in the same publication: Spendthrift Sunbelt States
Arizona, Florida, and Nevada have run through the riches of their boom and are starting to look more like cash-strapped New York.