Thursday, August 12, 2010

A Potential Fundamental Change...

...for decades, the U.S government has promoted a policy of encouraging "home ownership" (or, more accurately, a rent-to-own system through home mortgages).  

Now, the idea itself is not inherently bad if the homes are purchased with loans that can be repaid and downpayments are made that represent real equity on the front end.

Unfortunately, that has not been the case as the current economic mess clearly reveals.  The federal government has subsidized an unsustainable form of rent-to-ownership through tax deductions, highway/road spending policy, and a host of other relatively hidden incentives.

In light of all this, a recent story in the USA Today caught my attention:

Just how much should Uncle Sam do to help Americans buy their own homes? 
For 70 years — and for the last 15 in particular — the answer has been: Whatever it takes. Now, policymakers are pausing to reconsider. 
In the next few months, they'll weigh whether there can be too much of a good thing when it comes to helping families finance the American Dream. The rethink could mean a shake-up for a mortgage market addicted to government subsidies.
If this type of change really happened, it could have some fundamental effects on land use patterns, policies, and regulations since much of the current zoning system in many jurisdictions is predicated on the express idea of single, family-detached homes being at the top of the use pyramid as well as the implied idea that those homes will be owned (or, again, rent-to-owned).

Add in the proliferation of HOA rules and regs that address the ability to rent your house, and its easy to see how a shift away--even a small way--from federal policies that promote home ownership could have a major trickle down effect on the American land use system.

--Chad Emerson, Faulkner U.

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This is an interesting and important note, one that should have some follow-up study. In addition to the prospect of land use change, I believe the dysfunctionality of the estate system of land holding and ownership rights is being laid bare. That ancient agrarian-oriented legal device is a bad fit for contemporary urban real property. What may have worked for Blackacre may not serve for to describe entitlement in a coop on the 34th floor of a high-rise with optional access to common areas, including a swimming pool and a running track, garage space below ground, and a wireless security system.

Posted by: Kermit Lind | Aug 13, 2010 6:22:21 AM

Agreed. There is a fair amount of scholarship now dedicated to critical analysis of our homeownership fixation, e.g. Stephanie Stern (Kent). She and others have exposed the lack of empirical evidence behind many of the claims for homeownership benefits. And, in my view, demonstrated that much of our current policy is really a function of ideology. I think the fundamental issue is whether the current period of questioning will be sufficient to overcome what is arguably "capture" of our governing institutions (particularly the federal government) by the housing and financial industries.

Posted by: Tim Iglesias | Aug 13, 2010 9:35:18 AM

Awesome! Take that, local hysterical society.

Posted by: Above Ground Pool | Aug 13, 2010 7:55:09 PM