Tuesday, July 30, 2013

How Bad is Homeownership for America

Yglesias contineus to bang the drum against American housing policy:

A house is two things: a parcel of land and a complicated manufactured good that sits atop it. In other words, it's a commodity and a consumer durable good—similar to a car (consumer durable) that needs gasoline (commodity) to run. But even though both automobiles and tanks full of gasoline are widely owned in the United States, politicians don't run around trying to promote expensive cars and gasoline because we rightly recognize that this would reduce living standards, not raise them. But by encouraging mainstream middle-class families to make large leveraged investments in houses, you create politics around promoting housing scarcity. The problem here is that although any given person can certainly profit from the house he or she owns (or, more plausibly, the land it sits on) appreciating in value more rapidly than average, it's extremely difficult to see how a nation as a whole is going to become more prosperous by houses becoming more expensive.

Steve Clowney


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