Home Ownership or Investment for Profit? How About Both?
My study of economics leads me to conclude that it is not workable to simultaneously have national policies that encourage people to own their own homes and have individual home owners expect that the market value of their home will significantly increase over time. I conclude that it is not workable to have national policies encouraging, i.e. subsidizing, home ownership while at the same time allowing investment in homes purely for profit via real estate speculation.
Ironically we can both affordable homes for all and wonderful opportunities for investment. We just can't do it all simultaneously in the real estate market for homes.
Either we want home ownership to be widespread at affordable prices or we want our homes to be investments that appreciate over time enough so we can cash in to help us retire. If we make home ownership profitable we must also expect speculators to share in the wealth. If we pursue both policies which we have been doing since at least the 1930s, we guarantee perpetual boom and bust cycles that negate both goals. Is it not obvious that drawing more and more people into the housing market as we have done and while allowing investment purely for speculative profit must result in increasing the cost of housing to the point that housing becomes unaffordable no matter what the subsidy? Is it not obvious that this scenario must create periodic busts in the market price of homes thus destabilizing both home ownership and investment opportunities?
I say it is time to choose what we really want. But the choice is not between affordable housing and wonderful investment opportunities. The truth is that we can have both widespread ownership of affordable homes while at the same time increasing real opportunities for profitable and productive investments. We just can't do it at the same time by speculating in the housing market. Do we need any more proof of the need to do so than the current global crisis that was sparked by the real estate bust which has been likened to a conventional explosion used in a nuclear bomb to set off an even larger more destructive and toxic explosion?
Did we need to have the thing blow up so disastrously before we would even consider thinking about what we were doing? Fortunately there is a way to think about what we were doing.
My great joy in life is the certainty of knowing that humanity can have whatever it wants if it would but choose to do so. We are on the brink of choosing and one of the key areas of choice is right in our backyards whether we "own" that backyard or not.
Wendell Fitzgerald's Blog
My studies in economics lead me to believe that it is entirely possible to have the world work for everyone through establishment of simple economic justice.
I am a student of the economic theories of Henry George, the 19th century American political economist and social philosopher. He asked the question in his best known work, Progress and Poverty: why is there so much poverty amid so much wealth and wealth producing capacity. The answer he gave convinced me that sharing the earth… Continue
Posted on October 27, 2008 at 5:33pm — 2 Comments