The Case Against Homeownership

The Case Against Homeownership

Instead of perpetuating the Ponzi scheme of private property for some, we should be demanding economic security for all.


Homeownership is a uniquely American scam. Of course, homeownership itself is not unique to the United States. Yet “the emphasis Americans place on homeownership sets us apart from many other nations of the world,” according to Mel Martinez, who was President George W. Bush’s secretary of Housing and Urban Development (HUD).

In a 2002 speech at a Black church in Atlanta, Bush himself boldly proclaimed, “If you own your own home, you’re realizing the American Dream.” Mere weeks earlier, Bush had announced the establishment of National Homeowners Month.

Martinez claimed in front of Congress that homeownership not only “provides financial security for families” but also “generates economic strength that fuels the entire nation.” In the previous decade, President George H.W. Bush’s HUD Secretary, Jack Kemp, was known to frequently proselytize for homeownership as something that could “save babies, save children, save families and save America.”

These narratives date back to President Herbert Hoover, one of the most consequential champions of homeownership in America, who claimed that homeownership could “change the very physical, mental and moral fiber of one’s own children.” Homeownership, according to its proponents, not only makes one an American, but also a good and moral American, with ownership of residential property becoming “a primary factor for evaluating the citizen’s allegiance to the state.”

Hoover also endorsed the Better Homes Campaign, a nationwide project whose mission was to “make convenient, attractive, and wholesome homes accessible to all American families.” According to Lawrence J. Vale in Chasing the American Dream: New Perspectives on Affordable Homeownership, the campaign recruited 5,690 “local chairmen” across the country—an impressive organizing feat.

Another example is the Own Your Own Home campaign, originally created by the National Association of Real Estate Boards, a lobbying group now known as the National Association of Realtors. The government took on the cause in 1919 and popularized it through pamphlets, books, newspaper ads, free buttons and banners, lecture series, sermons, and songs, according to Vale. In this way, homeownership evangelism became an official government campaign.

There is some historical truth to the claim that homeownership makes one eligible to be American: At first, many states allowed only white, male property owners to participate in our newfound democracy. So deeply embedded in our historical psyche is its intrinsic value that we use homeownership rates as metrics for progress and prosperity. Even among progressives, statistics like the racial and gender gap in homeownership are cited as symptoms of growing economic inequity, taking for granted that we should all be aspiring to homeownership for financial stability in the first place. Both Matthew Yglesias and Paul Krugman denounced this habit back in 2008, but we seem to have cultural amnesia around the peril of that period’s mortgage crisis, and the doubts that crisis should have cast on homeownership as an ideal.

Part of this amnesia may be attributed to the fact that these narratives of homeownership were reinforced by federal policy. If Hoover popularized the values and morals associated with homeownership, President Franklin D. Roosevelt codified easy and widespread access to it. Roosevelt signed into law both the establishment of the Federal Housing Administration (FHA) and the Federal National Mortgage Association (known as Fannie Mae) to spur more home construction and free up banks to lend more, respectively. The FHA went on to create the 30-year fixed-rate interest loan, which has been called a “revolution” compared to short-term loans that were the previous norm. Trapping tens of millions of Americans into 30 years of debt could indeed be called a revolution—but not in a good way.

After multiple revisions of the federal tax code, including allowing deductions for mortgage interest and excluding an increase in the value of primary residences from capital gains tax, our government’s tax policy is now tailor-made to benefit the already wealthy and powerful over tenants and even homeowners themselves. Evidence from the Congressional Budget Office in 2001 demonstrated that government subsidization of homeownership loans passed on only half the benefit to mortgage borrowers; the other half enriched corporate shareholders.

Another reason for the enduring appeal of homeownership is that today’s alternatives are harrowing. As rents continue to climb to historic highs, tens of millions of Americans face eviction—not just in urban areas but across suburbs as well. Of course, risk of eviction is not spread evenly, and racial minorities and immigrants bear the brunt of this stress. Evictions are also a policy choice. Instead of providing an adequate supply of affordable housing, the United States chooses to create a shortage by underfunding housing subsidies. As a result, renters face financial insecurity: Nearly 25 percent of tenants pay more than 50 percent of their income toward housing.

If these renters could own homes instead, they might. After all, owning a home is one of the few ways American families save money and accumulate wealth. But homeownership is virtually impossible for many Americans; the national average qualifying household income for home purchase is $95,717 a year, while the national median household income is about $70,000 a year. Indeed, only 66 percent of US households own a home, while only 44 percent of Black households do.

Homeownership, however, is not as valuable a financial investment as it appears—or as we have been led to believe. While we may have forgotten since 2008 that homeownership can be risky, some critics go so far as to describe homeownership as a Ponzi scheme, “a massive up-front transfer of wealth from younger people to older people, on the implicit promise that when those young people become old, there will be new young people willing to give them even more money,” according to housing analyst Daniel Kay Hertz.

“Of course,” Hertz continues, “as prices rise, the only young people able to buy into this Ponzi scheme are quite well-to-do themselves.”

In plain terms, as writer Jerusalem Demsas puts it, “Homeownership works for some because it cannot work for all.” The wealthy and wealthier buy and sell in the housing market—while pushing the burden of ever-higher costs onto the ownership-ineligible working class through rising rents.

And while policy-makers have pointed to improved child outcomes, economic security, and civic engagement as positive spillover effects of homeownership, researchers from the Bloomberg School of Public Health to the Brookings Institution doubt the veracity of these claims. Besides, these positive effects might well stem from economic security generally—which could be achieved through other means, like a robust social safety net and renter-friendly policy.

Meanwhile, there is well-documented evidence of the environmental and social ills that homeownership’s progeny—suburban sprawl—wreaks on our country and environment, perhaps best illustrated by a recent poll that found Americans prefer living in a community where “houses are larger and farther apart,” even if amenities are farther away, and thus likely only accessible by car.

Rather than increase homeownership in the United States, we need to broaden pathways to long-term economic security that do not require it. Envision a renters’ system that encourages long-term financial security, location mobility for work and play, and socially oriented values of shared ownership, environmental protection, and community.

Examples of pathways to such a system already abound: Tenants activists in New York are fighting for a “Good Cause Eviction” bill that would limit evictions to breaches of lease terms, and effectively place rent control on all rental units. Just weeks ago, thousands in New York City residents marched across the Brooklyn Bridge to protest high rents, in tacit support of this bill. Groups like KC Tenants in Kansas City have helped pass an ordinance that provides renters a lawyer during eviction proceedings. Tenant unions are cropping up across the country, empowering renters to bargain with landlords through strength in numbers. Building social housing like in Vienna—where 80 percent of residents qualify for public housing—is a potential long-term solution.

Through these efforts and others like them, we can help establish security for all—rather than private property for some—in a new American social pact. This social pact is already possible—but if only we come together to fight to make it so.

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