Comments on: Emphasizing Homeownership Is Questionable Policy

By: susan

susan — Fri, 09 Jul 2010 15:07:47 +0000

Home ownership has always been driven by jobs. When government policies destroyed the job market, it destroyed the ability of people to not only buy homes, but to pay their existing mortgages. The biggest reason for the loss of jobs was the destruction of private sector jobs by the banks, supported by government policy that encouraged the lending sector to stop funding existing loans, particularly commercial, construction, and line of credit loans to businesses, thus causing huge layoffs.

By: Bill H

Bill H — Tue, 06 Jul 2010 14:07:04 +0000

I agree with Karen that home ownership will stabilize neighborhoods and is desirable for that reason. The maxim “No one takes a rental car to the carwash” is applicable in this situation as well. People tend to be much more careful with property in which they have an ownership interest.

I disagree with Karen’s statement that “private sector lenders [encouraged people to buy beyond what they can afford] without any government help.” Private lenders had policies in place to keep this from occurring, but government policies (more or less) forced lenders to become involved in increasingly risky arrangements; these institutions were backed by Fannie Mae and Freddie Mac which then bundled these mortgages into financial instruments – making those lending practices seem safer than they really were.

By: Karen

Karen — Mon, 05 Jul 2010 17:33:49 +0000

Some good points but I question your assumption that incentives for homeownership will encourage people to buy beyond what they can afford. After all, haven’t many private sector lenders done just that without any government help? The hidden assumption in your argument is that it will lead to people living beyond their means, which is not necessarily the case if the
program is structured to educate people. While homeownership is undesirable for some, research in community development shows that homeownership stabilizes neighborhoods, a goal that is worthy of government incentives if it can drive down crime and improve property values.