The Darkside of Homeownership

The New York Times reports:

Homeownership limits mobility. According to census data, 31 percent of renters moved in 2003, compared with about 7 percent of homeowners. While this stability can be good for a community, the reduced mobility can become a problem in the face of a local economic downturn.

And homeowners may influence social policy to benefit themselves, at the expense of others. In a study of voters in California in 2000, Mr. Glaeser found that homeowners were more likely to restrict new home-building, voting for tough zoning rules and land-use controls.

"Homeowners have spearheaded the movement to limit new housing supply that has artificially inflated housing throughout the U.S.," Mr. Glaeser wrote. "This is the downside to having individuals who have incentives to keep price up."

The tax incentives might even be hurting America's inner cities, increasing the segregation of rich and poor.

Mr. Gyourko and Richard Voith, a former economist at the Federal Reserve Bank of Philadelphia who is now a partner in Econsult, a consulting firm, have argued that the mortgage interest deduction encourages richer families to buy bigger places in the suburbs and leave the more cramped cities to the poor.

"It reinforces the ability of people to segregate out between higher and lower income," Mr. Voith said. "Whether this outweighs the benefits of homeownership is an open question."

Nothing like restricting supply,this is a giant "rent-seeking" coalition.