The Cult of Home Ownership Promotes Disastrous Politics

A blog about business and economics.
July 29 2013 11:54 AM

The Cult of Home Ownership Promotes Disastrous Politics

A home for sale in Illinois

Photo by Tim Boyle/Getty Images

Adam Posen had a smart piece over the weekend about the economically damaging cult of home ownership in the U.S. and U.K. focused mainly on the problems with home ownership promotion as financial policy. I'd like to extend the argument by noting how disastrous this policy dynamic is for housing policy. The goal of housing policy ought to be to bolster real living standards by making housing abundant and affordable without unduly siphoning resources off from other segments of the economy. If houses get cheaper, bigger, or better-located, that means real wages are rising—exactly what we want.

But promoting widespread ownership of urban and suburban real estate as the primary investment vehicle for middle-class families turns the whole thing on its head. A house is two things: a parcel of land and a complicated manufactured good that sits atop it. In other words, it's a commodity and a consumer durable good—similar to a car (consumer durable) that needs gasoline (commodity) to run. But even though both automobiles and tanks full of gasoline are widely owned in the United States, politicians don't run around trying to promote expensive cars and gasoline because we rightly recognize that this would reduce living standards, not raise them. But by encouraging mainstream middle-class families to make large leveraged investments in houses, you create politics around promoting housing scarcity. The problem here is that although any given person can certainly profit from the house he or she owns (or, more plausibly, the land it sits on) appreciating in value more rapidly than average, it's extremely difficult to see how a nation as a whole is going to become more prosperous by houses becoming more expensive. If we banned the construction of new cars and trucks, then America's existing stock of cars and trucks would become more valuable, but this would be a way of impoverishing the country, not enriching it.


The point isn't that everyone needs to rent. Some people are carless and many people lease them, but most Americans do own cars; perhaps on a level playing field the same would be true of houses. But there's no need to erect a vast policy superstructure whose point is to privilege home ownership over renting. The policy goal should be abundance, not ownership and investment gains.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.



Don’t Worry, Obama Isn’t Sending U.S. Troops to Fight ISIS

But the next president might. 

The Extraordinary Amicus Brief That Attempts to Explain the Wu-Tang Clan to the Supreme Court Justices

Amazon Is Officially a Gadget Company. Here Are Its Six New Devices.

The Human Need to Find Connections in Everything

It’s the source of creativity and delusions. It can harm us more than it helps us.

How Much Should You Loathe NFL Commissioner Roger Goodell?

Here are the facts.

Altered State

The Plight of the Pre-Legalization Marijuana Offender

What should happen to weed users and dealers busted before the stuff was legal?

Surprise! The Women Hired to Fix the NFL Think the NFL Is Just Great.

You Shouldn’t Spank Anyone but Your Consensual Sex Partner

Sept. 17 2014 5:10 PM The Most Awkward Scenario in Which a Man Can Hold a Door for a Woman
  News & Politics
Altered State
Sept. 17 2014 11:51 PM The Plight of the Pre-Legalization Marijuana Offender What should happen to weed users and dealers busted before the stuff was legal?
Business Insider
Sept. 17 2014 1:36 PM Nate Silver Versus Princeton Professor: Who Has the Right Models?
Dear Prudence
Sept. 18 2014 6:00 AM All Shook Up My 11-year-old has been exploring herself with my “back massager.” Should I stop her?
  Double X
The XX Factor
Sept. 17 2014 6:14 PM Today in Gender Gaps: Biking
  Slate Plus
Slate Fare
Sept. 17 2014 9:37 AM Is Slate Too Liberal?  A members-only open thread.
Brow Beat
Sept. 17 2014 8:25 PM A New Song and Music Video From Angel Olsen, Indie’s Next Big Thing
Future Tense
Sept. 17 2014 9:00 PM Amazon Is Now a Gadget Company
  Health & Science
Medical Examiner
Sept. 17 2014 11:48 PM Spanking Is Great for Sex Which is why it’s grotesque for parenting.
Sports Nut
Sept. 17 2014 3:51 PM NFL Jerk Watch: Roger Goodell How much should you loathe the pro football commissioner?