Fifty Years Of Government Intervention Fails To Boost Home Ownership

The Daily Caller reports:

Despite decades of federal intervention in the housing market, home ownership rates are virtually the same today as they were in 1968, according to an brief released by the Heritage Foundation on Monday.

According to the report, “the rate of U.S. homeownership has remained nearly constant over the past 50 years as government intervention has steadily increased, but the level of residential mortgage debt has increased nearly six fold.” Such policies created market distortions, “leading to artificially higher home prices and lower interest rates.”

The pace of government intervention was especially frenetic in the 1990s, the report says, such that, “from 1990 to 2003, Fannie [Mae] and Freddie [Mac] went from holding 5 percent of the nation’s mortgages ($136 billion) to more than 20 percent ($1.6 trillion),” all with implicit government backing.

Prior to 1968, “government-backed mortgages never accounted for more than 6 percent of the market in any given year.” However, “the homeownership rate was 64 percent in 1968, virtually identical to what it is now.”

Isn't time to go back to a free market in housing? What could be stricter way of regulating risk than the regulation that emerges in a free market: 50% down payment and a 7 year mortgage.