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Should gov't push owning a home?

A 'sold' sign stands outside a home in Pasadena, Calif.

TEXT OF STORY

Steve Chiotakis: Treasury Secretary Tim Geithner is expected to tell members of the House Financial Services Committee that the housing recovery remains pretty precarious. The congressional committee will be asking, should the government be in the business of promoting home ownership? Marketplace's Nancy Marshall Genzer takes a look.


Nancy Marshall Genzer: For years, the government's mantra was everybody should own a home. So what should the government do now?

Vince O'Donnell: I don't think it should the government's goal to make everyone a homeowner.

Vince O'Donnell is with the Local Initiatives Support Corporation, which focuses on community development.

O'Donnell: Some people don't have the means to be owners, or the temperament. And the government should not be pushing them in one direction or the other.

Freddie Mac and Fannie Mae are a big part of the government's home ownership strategy. They buy up mortgages, giving banks more money to lend.

Former investment banker Doug Elliott is now at the Brookings Institution. He thinks Fannie and Freddie fed the housing bubble by buying up so many shaky loans.

Doug Elliott: They have $5 trillion of mortgage risk of various kinds.

Elliot says he thinks Fannie and Freddie should be abolished so they don't feed another housing bubble. That's one option to be considered at today's hearing.

In Washington, I'm Nancy Marshall Genzer for Marketplace.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.
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Perhaps one of the motives in trying to increase the homeownership rate was to raise the percentage of Americans who think they might get to share in the rising value of American land from 66% to 69%. That doesn't address the fact that 31%, as renters, were not sharing in that appreciation, or the more relevant point that appreciation is very uneven, and that in most of the heartland, there was relatively little appreciation.

Most of us have never learned in any class or any reading that houses depreciate, and that land appreciates for reasons which have nothing to do with the individual landholder. Where land represents a high share of the value of housing, as in Boston, NYC, San Francisco metros, rising land value far offsets the 1.5% depreciation of the house. Where land values are low, on the fringes, in the heartland, and the house represents, say, 75% of the value of the property, there may be little appreciation.

But not recognizing that, people jumped on the bandwagon, thinking that owning a home, with the magic of leverage, of supposed income tax benefits (which in reality flow only to a relative few who don't use the standard deduction), was somehow their key to riches. They didn't quite see how, but doesn't everyone know that homeowners have lots more wealth than renters? Wasn't that enough information on which to base a purchase decision, particularly with mortgage brokers and Realtors telling them to get in while they could, and everything would be okay with their mortgage and life would be good?

Most people's education in land economics is sadly lacking -- and that includes the economics graduates of most of our best colleges and universities.

Where do you start to get the real story? Henry George. Read more about his ideas, or take an online course at henrygeorge dot org, or at an HG school in NYC, SF, Chicago or Philadelphia. You'll gain new lenses to understand a lot of things which otherwise make no sense!
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I agree that home ownership brings stability and involvement to the neighborhood and community. Mobility we have plenty of. Wouldn't it be nice if that came about because of a strong middle class able to buy their own homes in a financially reasonable way instead of from money being artificially pumped into the system.

Home ownership stabilizes communities and families. Renters feel no responsibility (in general) for where they live. They do not care about maintaining the parks, local government, local schools.

Home ownership is one of the classic misconceptions that is promoted by the general public and government. It limits your mobililty and costs most people money. You have to have fiscal discipline to make home ownership pay, since it is a long term play and most people don't have that kind of self-control. The only tangible benefit to home ownership is you can do what you want to the house.

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