Home ownership has been elevated to a quintessential American right. Having a home (and a mortgage) is proof of your worthiness as a person and as a citizen of the United States. This belief is driving much of the legislation directed at mortgage companies and lenders, and in fact has fueled the Alt-A and sub-prime mortgage explosion. But how reasonable are these expectations?
The National Association of Realtors puts the current ownership (without factoring in foreclosures) at 68.9%. This is confirmed by US Census data. An earlier report of the US Census Bureau data established the home ownership rate at between 64 and 65% up to 1995. Some economists have suggested that the sustainable level of home ownership is around 60%. This means that 40% of the population of the United States should not own a home. At least some local governments appear to understand this. It is illustrative to consider the composition of this 40%.
There are valid life choices that mitigate against home ownership. A young and very mobile population are not good candidates for the commitment that owning a house requires. The real-estate taxes I pay on my house alone would rent a nice apartment for a year. Then there is maintenance, lawn care, etc. Your mobility is restricted if you own a home by the market conditions. Many homeowners are saddled with dual homes and payments when they relocate to change employment until the market improves or the price is reduced to sell. For highly mobile members of the workforce, homeownership is not warranted.
There are also what I classify as two types of mental deficiency: functional and dysfunctional. The functional type includes people who are otherwise normal appearing who can participate in society yet are incapable of planning and making the long term strategies and commitments required to own a home. (Britney Spears comes to mind). They have no awareness of the consequences of their actions in the long term. These people are better served by the rental market.
As for for those with dysfunctional mental deficiencies, state institutions existed in the United States up through the 1950’s to house people with behaviors which were deemed problematic in a free society. These problems could be related to alcoholism, pharmacological dependency, or pathological conditions such as Downs. A lot of these facilities were of the “out of sight, out of mind” class and were bastions of repression and intolerance. (Nursing homes enjoy the same status today.) Coinciding with new liberal thought and an era of enlightened psychological analysis, many of these facilities were shuttered and razed. The result, as should be unsurprising, is that many of the former occupants reverted to their inclinations and live on the streets of our cities — the homeless.
Since they are no longer out of sight, and indeed far too visible, many well-intentioned efforts to provide for them have been initiated. Care for the homeless has been a hue and cry of the liberal left for the last twenty years, interesting in that the ‘problem’ was created by their meddling in the state institutions in the first place. The cynic in me questions why they even bothered since the majority don’t vote anyway. Nonetheless, they are homeless, and well-intentioned people are tasking our legislatures to provide for them. Providing a means for these people to obtain a mortgage is idiocy.
Seattle near Pike’s Place Market, August 30th 2007
Finally there are the homeless by choice. These are the people who would prefer not to appear on the tax rolls and registries of governmental units for whatever reason. To some, it is enduring freedom to do whatever they want, and to do it whenever they please. These have been around for a long time probably commencing with the Revolutionary War — certainly since the Civil War and demonstratively so after the Great Depression. They constitute the tramps, hobos, and sadly, even the bindlestiffs (hobos who robbed the bindles of other hobos).
From these observations, it should be apparent that many citizens are homeless by choice and that no government policy is going to change this. Trying to increase home ownership over a demonstratively sustainable level has accomplished nothing except contributing to the current subprime mess.