Rising housing prices have added more than $1 trillion to the market value of American single-family homes in the past year, prompting homeowners to feel a “wealth effect” that helped lead to a 3.4 percent increase in consumer spending in the first quarter. That’s great news, right? Gene Epstein of Barron’s offers a different perspective.

Why barely one cheer, then? Because this housing recovery has been so stuffed with government steroids, you wonder if it could make it on its own if these drugs were withdrawn. Ask the average person what share of new home mortgages are guaranteed by government, and he or she is unlikely to estimate anywhere near 91.6%. And yet that is the actual figure as of the first quarter, based on data from Inside Mortgage Finance.

The insurers and guarantors include the Federal Housing Administration, the Veterans Administration, and the government-sponsored enterprises Fannie Mae and Freddie Mac, among the major entities.

And where the FHA and VA are concerned, the down payments required are minuscule by conventional standards, ranging from 0% to 5%. According to a recent FHA report, the average down payment required on its insured mortgages in the first quarter has been a little over 4%. The VA’s rather chilling statistical category called No Down Payment indicates that close to 90% of its home loans normally enjoy this status.

Recent data are not available for the share of all mortgages insured by the FHA and VA. But we do know they accounted for a hefty 46.4% of all mortgages in 2011, way up from an average of about 10% from 2004 to 2007, just before the Great Recession.

And even if the FHA/VA share has shrunk to about one-third of mortgages over the recent year, that one-third would help explain the rise in house prices, given the minuscule down payments. Imagine if a third of all recent purchases of stock were done on margin requirements of 0% to 5%. That would certainly help explain the bull market in equities. …

… We all hope for more prosperous times. In light of that hope, the government-drugged housing market is not inspiring, but dispiriting.