Wednesday, August 28, 2013

LA Times Defends Government Intervention in Housing Market

In the business pages of the LA Times, Michael Hiltzik makes the case that the U.S. should continue to encourage homeownership with a full arsenal of government policies.  The piece seems thinly researched and runs counter to much recent academic discussion:

There's no real doubt that homeownership is a goal that should be encouraged by government policy. Homeowners vote more often than renters. They engage more with neighborhood and community groups. Studies suggest that their children do better in school and are more likely to graduate from high school and move on to postsecondary education.

The difference in the length of homeownership is the single largest factor underlying the wealth gap between black and white families, according to research by Thomas Shapiro of Brandeis University. That's important because from 1984 to 2009 the gap in median net worth tripled, from $85,000 to $236,000. Much of the difference is home equity, which gives home-owning families a leg up in helping relatives with down payments, lowering the cost of borrowing and improving access to credit, Shapiro has found.

Steve Clowney

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