In the thread about abolishing tax deductions, a big topic is the home mortgage interest deduction. Since that’s the biggest deduction the average American family has, it makes sense that it’s at the forefront of the discussion.
Several people mentioned the importance of the government promoting home ownership, since it is in general good for society. But I’m not so sure. It’s questionable if the mortgage deduction really provides an incentive to own a home. It gives people more money to buy houses with, which drives the price of housing up, but only for those who owned before the deduction was introduced. But, let’s assume that it does. Do we want to encourage home ownership? Is it really a net gain for society?
[ul][li]Home owners care more about keeping their communities strong, which helps improve local businesses, schools, and lots of other things.[/li][li]Home ownership (with mortgage) provides a sort of automatic savings plan for many people, which relieves the government (taxpayers) of some support burden for people in old age.[/li][li]Home ownership increases property values, which provides more money to state and local governments.[/li][/ul]
[ul][li]Home ownership limits mobility, causing higher unemployment.[/li][li]Going into debt for home ownership contributes to the generally poor financial state of many people.[/li][li]Home ownership concentrates investment risk. Home owners (starting out, anyway) generally have a much less diverse portfolio.[/li][/ul]
Obviously, not an exhaustive list. Some of those were mentioned in the other thread. Some are my own thoughts. My position is that in attempting to actively promote home ownership, the government does more harm than good. Instead of a home being a stable economic base, the housing market has become more leveraged and speculative. And I have a feeling that the economic downside of decreased mobility is substantial.