TEXT OF COMMENTARY
BOB MOON: In between this year’s blaring headlines about the Great Recession, health care and global climate concerns, there was lots of other economic news that didn’t get high-profile coverage. So as the year winds down, we’ve decided to put the spotlight on some of the “under-covered” stories of 2009.
We’ve asked a few of our commentators to choose some news that didn’t make the front page. And economist Susan Lee thinks we didn’t pay enough attention to the good news from an unlikely place.
SUSAN LEE: Every day, we hear more dreary numbers from the housing market, like sad foreclosures and drooping prices. But I have a number for you that’s good news: the rate of home ownership is about to log its fifth year of decline.
So, you’re probably wondering why a decline in home ownership is good news.
Here’s the short answer. Thanks to massive government subsidies for home owning, Americans are way over-housed. Just remember when John McCain ran for president, the fact that he owned eight houses scarcely raised eyebrows.
Now, I grant you, government subsidies which allow people to own homes sound lovely. And I also grant that homeowners are more civic minded than renters. But from an economic point of view, the indirect costs of these subsidies hugely outweigh the benefit.
First, consider that government subsidies amount to around $100 billion a year — that’s a lot of lost tax revenue. And it represents $100 billion the government could have plowed into really important things like education.
Second, consider that the money people pour into home owning is money that can’t go into investments in private business. Would we rather have a million homes with jacuzzis or one start-up busy hatching the next Internet or the cure for diabetes?
The plain fact is that we’re diverting hundreds of billions of dollars from completely worthy and productive social and private investments.
When the housing bubble started to inflate in 2002, 65 percent of Americans owned the homes they lived in. So, even if this year’s decline brings us to 67 percent, we’re still way over what’s taken for normal.
But, given our recent housing mania, I’ll call that modest decline good news.
MOON: Susan Lee is an economist in New York City.
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