Should Homeownership Even Be A Policy Goal? No

Listening to politicians, you’d think that every family should own its home — in fact, that you’re not a real American unless you’re a homeowner. Because the I.R.S. lets you deduct mortgage interest from your taxable income but doesn’t let you deduct rent, the federal tax system provides an enormous subsidy to owner-occupied housing.

In effect, U.S. policy is based on the premise that everyone should be a homeowner. But there are some real disadvantages to homeownership.

1. There’s the financial risk. Although it’s rarely put this way, borrowing to buy a home is like buying stocks on margin: if the market value of the house falls, the buyer can easily lose his or her entire stake.

2. Owning a home also ties workers down. Even in the best of times, the costs and hassle of selling one home and buying another — one estimate put the average cost of a house move at more than $60,000 — tend to make workers reluctant to go where the jobs are.

3. There’s the cost of commuting. Buying a home usually though not always means buying a single-family house in the suburbs, often a long way out, where land is cheap. In an age of $4 gas and concerns about climate change, that’s an increasingly problematic choice.

~Paul Krugman in today's NY Times