The weekend version of the Wall Street Journal brought an excellent article titled “A New American Dream: Renting”  It covers the history of government incentives to encourage homeownership and the resulting troubles that these have caused in our economy.  I have long worried about the fact that often people buy houses that they cannot afford when they are in transient situations and really should rent.  Or, better still, how many of us know a young couple that bought a house that was slightly out of their reach on the expectation that their incomes would continue to go up…and, after all, they were getting a terrific break on their income tax!  Meanwhile their McMansion on the edge of town sits in a field with no furniture in the living room.  From the article:

But for millions of Americans at risk of foreclosure, the home has become something else altogether: the source of panic and despair. Those emotions were on full display last week, when an estimated 53,000 people packed the Save the Dream fair at Atlanta’s World Congress Center. Its planners, with the support of the Department of Housing and Urban Development, brought together struggling homeowners, housing counselors, and lenders, including industry giants Bank of America and Citigroup, to renegotiate at-risk mortgages. Georgia’s housing market has been devastated by the current economic crisis—338,411 homes in the Peachtree state went into foreclosure in May and June alone.

urbansprawl1In our older cities, in the Primurbial ring – the one that the streetcars could reach, there are beautiful apartment homes.  Three and four story walk-ups in the south; seven and eight stories furnished with mid 20th Century Otis’s in the mid Atlantic and further north.  These were places where families grew up, didn’t need cars and lived full, wonderful lives.  Perhaps it is a primordial urge that we are migrating back in these days.  Cars and the destruction of proven mass transit systems coupled with easy, Federally assisted credit and the mortgage income tax deduction were huge contributors to suburban sprawl.  Perhaps now in a more frugal time, we should soberly assess whether this strategy has been wise.  I for one would favor getting the incentives (disincentives?) out of the market.  It would take time, but cutting back on the mortgage income tax deduction coupled with the gradual elimination of Fannie Mae and Freddie Mac would start to put the rental option on a more even playing field with for-sale housing and better balance the housing needs of our nation.

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