The case against homeownership

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New York Times columnist Paul Krugman writes one of those ‘Tipping Point’ columns today that speaks volumes about the shifting debate about housing in America. His point? Homeownership is overrated and over-supported by the federal government.

Highlights: ‘Why should ever-increasing homeownership be a policy goal? How many people should own homes, anyway?... Homeownership isn’t for everyone. In fact, given the way U.S. policy favors owning over renting, you can make a good case that America already has too many homeowners.... All I’m suggesting is that we drop the obsession with ownership, and try to level the playing field that, at the moment, is hugely tilted against renting.’

Krugman points out the rarely mentioned economic risk of buying a house -- losing money in the short term. He guesstimates that 10 million American households are upside down in their mortgages right now, owing more than their homes are worth.

Definitely worth reading, if only as a reminder of how conventional wisdom can shift by 180 degrees:

2002 Conventional Wisdom: Increasing homeownership levels is a good government policy and lenders should be encouraged to find ways to lend to people who have less-than-good credit.

2008 Conventional Wisdom: ‘There are some real disadvantages to homeownership,’ as Krugman writes today.

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Photo: Los Angeles Times