(Once again, a guest post from Ed, kindly invited by notorious density lobbyist P. Trolleypole.)
Despite the collapse of the housing market, homeownership is still out of reach for many Greater Boston residents, according to a new study by the Urban Land Institute.
So begins an article from Saturday's Boston Herald. The article spends a lot of time tossing around median home prices in Greater Boston and discussing how out of reach they are for working class households, and then talks a little about an affordable housing program that is on the MA ballot in November. The option of renting never comes up, nor is there any talk about how to make or keep rents affordable.
I'm not opposed to worrying about rising costs of shelter in cities, but the outsized focus on homeownership drives me a little crazy. This fetishization is why we have tons of awful policy in this country:
- Mortgage interest tax deductions, which distort the home market, and the benefits of which go largely to the wealthy:
The deduction is wildly regressive. The tax savings for households earning more than $250,000 is 10 times the tax savings for households earning between $40,000 and $75,000 a year, according to recent research by James Poterba and Todd Sinai.
- Fannie and Freddie, which, for example, had the US taxpayer implicitly (de facto, at this point) guarantee 95% of new mortgages in 2009, and which have a heavy single-family bias, giving sprawl a helping hand
- FHA-subsidized loans, which explicitly put every taxpayer on the hook for tons of mortgages with only 3% down (and low downpayments are a strong predictor of default, especially when prices are falling)
The list goes on.
Meanwhile, this is all in support of a system that encourages households to (1) take on massive debts in order to (2) make a huge and completely undiversified investment in (3) a highly volatile asset. So, when bubbles pop and prices drop 20, 30, 40 percent, you have made sure that a large portion of your population has seen its wealth evaporate. On top of that, being so highly indebted makes households less mobile, and less able to find new opportunities - which is why you see higher unemployment in places with more homeownership - we've encouraged people to weld their escape hatches shut.
All of which is to say - maybe it's time to rethink how we house people. Should one's shelter really be tied to one's investments? Should we be paying more attention to affordable housing policies that help renters? Should we start dismantling all these subsidies, and maybe turning some of that money to causes that help low-income renters? This aspiring density lobbyist thinks so.