Word: homeownership
(lookup in dictionary)
(lookup stats)
Dates: all
Sort By: most recent first
(reverse)
...With the banking system still shaky, further big declines in house prices could bring disaster. Slowing a price collapse is a reasonable aim of government policy. But as we dig out of this mess, we ought to ask whether the vast infrastructure of government support for homeownership that has been built up since the 1930s is really such a wise policy...
...subsidize homeownership? Let me count the ways. First, more than 80% of the mortgage loans made in the U.S. so far this year have been bought by the government-sponsored entities (GSEs) Fannie Mae, Freddie Mac and Ginnie Mae. That keeps the interest rates on those GSE-backed mortgages substantially lower than on mortgages that can be sold only on private markets, because taxpayers are on the hook for defaults on the former. That risk, long hypothetical, became reality as we got stuck with a $291 billion rescue bill for Fannie and Freddie in the fiscal year that ended...
...other interesting bit about the mortgage-interest deduction is that policymakers never intended it to help promote homeownership - something that many people assume to be the case and use to help frame their thinking about the appropriateness of using the tax code to boost home-buying. Rather, the deduction is an artifact of the 1894 federal income-tax code, under which all interest was deductible, since pretty much all interest was a business expense. There weren't really loans to buy houses back then. In other words, a massive and costly cornerstone of American housing policy isn't even something...
Then again, it was decisions made by government officials in the years before the crisis that allowed things to get so bad. From ill-considered deregulation of banking and derivatives to over-the-top encouragement of homeownership, Washington's fingerprints are all over the crisis. Almost nothing has been done to right these wrongs. That's lesson No. 3. Put another way: it's really hard for a democracy to make big changes in the absence of a big crisis--and the big crisis has passed...
...conclusion, then, is that policymakers probably can't bolster how well kids do in school simply by crafting programs to encourage homeownership. The $100 billion-plus in annual tax breaks and subsidies sent the way of homeowners might do many things, but helping the nation's children doesn't necessarily appear to be one of them. "You can't conclude that by making more people into homeowners you can cause all these other good things to happen," says Barker, "because maybe these people are different in the first place...