In Praise of Homeownership

In the wake of the sub-prime mortgage meltdown, it has become fashionable to remind people that homeownership isn't for everyone. Last Friday, I listened to a report on NPR from Wheaton, MD, which is only a few miles up the road from my home, where a hard-working Hispanic woman was being thrown out of her house bought for just under $400,000 near the top of the bubble. The details were both depressing and anger-inducing: the unscrupulous mortgage lender had qualified this single mom for a teaser-rate loan by including the money she would earn from renting out her basement to itinerant laborers.

But what really got to me about the story was the few comments from her teenage son. He worked hard around the house, planting flowers, and keeping the exterior in good repair. Like his mom, he also wanted a part of the American dream.

I see it every time I drive through Wheaton (to get to my daughter's high school, the golf course, or the local shopping mall). The tiny bungalows that are owned are easy to spot. So are the rentals because paint is peeling and their lawns unmowed. Pride of ownership matters, especially in the older, inner-ring suburbs that make up the bulk of housing for America's lower middle-class.

It also caused me to think back to my own first experience in home ownership. It was the mid-1970s, I was working as a printer at the afternoon newspaper in Cincinnati, had one child with another on the way. My wife and I were both trying to finish college while working and raising a family. With the help of a government-financed mortgage and the home mortgage deduction (without which the interest rate made me unqualified for the loan), we took a run-down inner-city home that had been converted into a three-flat in the 1950s and restored it to its original purpose.

We were part of the first wave of gentrification in America's cities. And whatever one thinks about the displacement that accompanied that phenomenon, returning young families were a boon for cities. The phenomenon would not have been possible without federal programs that support home ownership.

Every time I return to Cincinnati to visit my son (I was last there in May to receive a Distinguished Alumni Award from the University of Cincinnati), I make a point to drive through the old neighborhood. It's still well-painted, with its tiny postage-stamp front laws well-kept. And best of all, there were still a clutch of small kids, black and white, playing on its streets.

Home ownership is not an "obsession," as Paul Krugman describes it in his column today in the New York Times. It is the bedrock on which community stability is built in America. Homeownership makes neighbors come together to maintain local schools, local streets, improve the local business district and highlight incidents of crime to make sure things aren't getting out of control.

Has it exacerbated sprawl by subsidizing new home construction far from cities? Absolutely. But there are better tools to deal with that issue. Zoning restrictions, agricultural land protection, and removing road-building subsidies directly tackle that problem. Removing home ownership subsidies is a blunt instrument for dealing with sprawl.

It is frequently argued that the home mortgage deduction is unfair. The higher the cost of one's house and mortgage and the higher one's tax bracket, the larger the subsidy. Again, if equity is the goal, then these problems can be fixed by either capping the value or indexing its level based on income, not removing it entirely.

As I drive around my neighborhood, which is near two mass transit stops and is in an older inner ring suburb outside Washington, I see dozens of townhomes being built on land that had been deemed unsuitable for building when the first wave of home-building swept through this area in the two decades after World War II. This is the classic in-fill housing, precisely the kind of construction that will be needed in the next several decades as America, and the rest of the world, deals with the global warming crisis.

Congress should crack down on unscrupulous lenders, of course. It should rebuild systems for protecting novice homeowners when they enter the home mortgage market for the first time. They could even tinker with the home mortgage deduction to make it more fair.

But home ownership is still the best way for young families to build personal and community equity in our society. The recent excesses of the market shouldn't blind us to that enduring reality.

Posted by gooznews at June 23, 2008 08:27 AM