MATTHEW DESMOND MAY 9, 2017, "How Homeownership Became the Engine of American Inequality," New York Times
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An enormous entitlement in the tax code props up home prices — and overwhelmingly benefits
the wealthy and the upper middle class.
Almost a decade removed from the foreclosure crisis that began in 2008, the
nation is facing one of the worst affordable-housing shortages in generations. The
standard of “affordable” housing is that which costs roughly 30 percent or less of a
family’s income. Because of rising housing costs and stagnant wages, slightly more
than half of all poor renting families in the country spend more than 50 percent of
their income on housing costs, and at least one in four spends more than 70 percent.
Yet America’s national housing policy gives affluent homeowners large benefits;
middle-class homeowners, smaller benefits; and most renters, who are
disproportionately poor, nothing. It is difficult to think of another social policy that
more successfully multiplies America’s inequality in such a sweeping fashion.
[T]ax breaks ... the biggest being the mortgage-interest deduction — or MID, in
wonk-speak. All homeowners in America may deduct mortgage interest on their first
and second homes.
The owner-renter divide is as salient as any other in this nation, and this divide
is a historical result of statecraft designed to protect and promote inequality. Ours
was not always a nation of homeowners; the New Deal fashioned it so, particularly
through the G.I. Bill of Rights. The G.I. Bill was enormous, consuming 15 percent of
the federal budget in 1948, and remains unmatched by any other single social policy
in the scope and depth of its provisions, which included things like college tuition
benefits and small-business loans. The G.I. Bill brought a rollout of veterans’
mortgages, padded with modest interest rates and down payments waived for loans
up to 30 years. Returning soldiers lined up and bought new homes by the millions.
In the years immediately following World War II, veterans’ mortgages accounted for
over 40 percent of all home loans. ...
While most white families own a home, a majority of black and Latino families do not.
Differences in homeownership rates remain the prime driver of the nation’s racial wealth gap. In 2011, the median white household had a net worth of $111,146, compared with $7,113 for the median black household and $8,348 for the median Hispanic household. If black and Hispanic families owned homes at rates similar to whites, the racial wealth gap
would be reduced by almost a third. ...