Home > Housing, The Economist > Breaking Glass Arguments, ctd

Breaking Glass Arguments, ctd

I previously showed how Fannie Mae, Freddie Mac, and other GSEs were unlikely to be the cause of the housing boom (which lead to the subsequent bust). Reiterating this argument at our last meeting, I was challenged on the usefulness of the organizations. Of course, I tried to make clear that even if they didn’t cause the boom and bust that didn’t mean they were beneficial or necessary. This chart (via The Economist) makes clear both that GSEs weren’t responsible for the housing boom and aren’t necessary for supporting our housing market. 

The Economist this week argues that these GSEs should be phased out of existence. The best argument (and the one I used) is that “America’s obsession with home ownership is itself questionable, especially now that the trap of negative equity has hampered workers’ ability to move in search of jobs.” All government policies that promote home ownership are questionable to me including the large tax breaks we give to home buyers. Why are we promoting labor immobility and suburban sprawl, which among other things is terrible for the environment? If people value owning a home so much, they’ll buy one. 
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