Submitted to The Economist
Though your newspaper’s attempt at presenting the issue of homeownership in an expansive and historic view was engaging and unique (“Home ownership is the West’s biggest economic-policy mistake”), the coverage was quite narrow and incomplete.
Homeownership rates vary wildly across countries for a variety of reasons. For example, to lump Romania – which went from zero private home ownership to a rate over 95% virtually overnight after the collapse of communism – as somehow a failure in homeownership policy is as absurd as implying that Japan has affordable home prices without acknowledging the country’s declining population. For reference, consider home prices in Youngstown, Ohio, where population is falling and housing is exceedingly affordable, to verify if the two variables are related.
You correctly point out that the rapid rate of job creation in San Francisco has pushed home prices to record high levels, but this is more the result of misguided local policy that has prevented developers from building homes than anything else. In fact, while Texas and Utah have enjoyed even stronger job creation, home prices have remained manageable because construction has been relatively active.
We at National Association of Realtors® have been fervently advocating for increased housing supply and responsible lending standards. When Fannie Mae and Freddie Mac were bailed out by U.S. taxpayers, the federal government’s primary motivation was defending the entities’ foundational mission of providing accessible mortgages to creditworthy Americans. But, in the aftermath of this bailout, mortgage default rates have plunged while profits returned to the government have been significant– far exceeding initial investments. Fannie and Freddie should have never gone off track, wrongly building an internal hedge fund to bet on the market and drive profit, but the American people have always viewed their mission of promoting responsible and sustainable homeownership as worthwhile.
Homeownership provides immense benefits for our country (economic growth), local communities (civic and charitable engagement), and for families (wealth building and performance outcome of children).
In your continued dismissal of the positive values of homeownership, a question should be asked: who would own real estate if not homeowners? Landlords, both small and corporate, and the government, but not the masses of private citizens living in the country? Would a corporate oligarch-controlled country provide for a better society? What about a government-owned country? Most students of both history and economics would resoundingly answer no.
A country that does not value property-owning democracy should expect eventual transition into socialism and the steady disrespect of property (according to John Locke’s and Thomas Jefferson’s definition of ‘The Pursuit of Happiness’). Take a look on the other side of the European continent – where Romania has been steadily growing in the presence of democratic capitalism – and we see just how valuable the opportunity for private property is in the promotion and defense of prosperity, freedom and happiness.