Housebound: Why homeownership may be bad for America

Clive Crook:

For decades, owning a home has been one of the safest and most profitable investments an American could make, and the country has been alive to the fact. Households in the United States, taken together, spend nearly all that they earn, and save next to nothing. It is thanks only to high homeownership and rising home prices that they have seen their net worth grow. The nation’s housing has been both its savings and a key enabler of economic expansion: The long boom in house prices powered consumption that would otherwise have seemed unaffordable. That is why falling house prices—something that the country as a whole has not witnessed since the 1930s—are hurting so much, and why they pose such a danger to the economy.

The cultural importance of homeownership has deep roots. In many societies, owning property was once a requirement for full citizenship, and almost all Western democracies gave property owners the vote first. Even so, the United States is unusual in the importance its citizens attach to owning a home—and, as driving through the country’s endless suburbs leads one to conclude, preferably the biggest home possible. Lavish tax breaks have expressed and redoubled the enthusiasm for many rooms of one’s own, and for the titanic mortgages required to pay for them. The cultural attachment came first; the tax relief duly followed. Together, they seem immovable.