In Defense of: The Home Ownership Ideology

Dean Baker, author of "The Conservative Nanny States," has written an article featured on RealClearMarkets.com entitled "The Homeownership Ideology." Baker's article, after blowing past the alleged causes of the housing bubble and subsequent deflation, proceeds to level blame against the belief in home ownership as a "virtue" - in and of itself. He points out that during the height of the market's fervor, it was not good policy by economic and political talking heads to promote buying a home. Especially, Dean articulates, when it comes to lower income households. These families and individuals opted, quite tragically, to buy properties at prices 20 to 30 times the annual rental cost in their given communities.


I agree with Dean's premise - pitching homeownership to the poor and those who cannot afford it doesn't make sense. In fact, I think the whole reason mortgage products like Option-ARMs, 100% Interest Only's, or 40-Year-ARM's ever saw widespread use was because individuals that did not have the discipline or wherewithal to purchase a home had been convinced they needed a home - and at any cost. Those people are now realizing the cost, as are the businesses that swarmed around them for their one-time business. Now we all feel the repercussions of those actions.

I do have some mixed feelings about a website sponsored by Illinois Governor Rod Blagojevich and The Illinois Housing Development Authority (ihda.org). While some of the money offered drastically improves one's ability to purchase a home, some of the conditions make it painfully clear that those best qualified are those with the least qualifications. Certainly we should not be encouraging EVERYONE to become a homeowner. This is somewhat akin to suggesting an alcoholic try to keep a houseplant alive before trying to date, or own a pet. Perhaps individuals should be coached along the line of financial discipline, and income stability, prior to purchasing homes on 30 year mortgages. I am sure Blago is not troubled by the website- I believe he has enough other things worrying him.


What I differ with Mr. Baker on is primarily a matter of timing. While I believe that baiting poor or lower-middle-income Americans into buying homes is not a positive thing for Americans, I do not think that de-legislating the allure of owning your home is an idea that should be batted around in our halls of government. But especially NOT NOW.


If there has ever been a time when individuals should be encouraged, or browbeaten, as to the virtues of homeownership, it is now. When rent prices are trying to skip right alongside with inflation, buying a home at a still-historically-low interest rate seems to be a sound plan. The market also provides them the time to educate themselves, and exercise patience - finding the correct property, at a price that truly suites their budget.

Imagine, however, if congressmen and women began discussing reversal of the tax deductibility of mortgage interest payments. The legislative carrots that guide individuals into homeownership ought not be scrapped just because markets are subjected to a business cycle that can be destructive at times. The ideology of homeownership's virtues should not be traded in just because of the financial downturn of the moment - perspective is needed to look into the face of the next boom, and sort out what can be done differently to ensure fewer are preyed upon, and fewer succeed in defrauding the system. Instead of railing against homeownership, articulating the true benefits of home ownership might be a more productive endeavor.