by Joseph Coletti
Senior Fellow, Fiscal Studies, John Locke Foundation
Has government policy, in promoting home ownership, actually made it more difficult to own a home? It’s almost a ridiculous question: who ever heard of a government policy having unintended effects that are opposite of intended outcome? It’s like suggesting that there was gambling at Rick’s Cafe.
The Economist trains its editorial fire on “the horrible housing blunder” it calls “The West’s biggest economic policy mistake,” and attributes many social ills to the catastrophe. Consider this:
In 1990 a generation of baby-boomers, with a median age of 35, owned a third of America’s real estate by value. In 2019 a similarly sized cohort of millennials, aged 31, owned just 4%. Young people’s view that housing is out of reach—unless you have rich parents—helps explain their drift towards “millennial socialism”. And homeowners of all ages who are trapped in declining places resent the windfall housing gains enjoyed in and around successful cities.
The magazine sees hope in the 2017 cap on mortgage interest deductions, but finds that “the number of new houses constructed per person in the rich world has fallen by half since the 1960s.” Home values have jumped 4.7% per year in Wake County since 2016, faster than 4.6% compound growth rate in Mecklenburg County between revaluations. No wonder affordable housing is a major concern for city councils, political parties, and presidential candidates.