White Picket Fence? Not So Fast

By Viral Acharya, C.V. Starr Professor of Economics, Matthew Richardson, Charles E. Simon Professor of Applied Economics, Sidney Homer Director, Salomon Center for Research in Financial Institutions and Markets & Professor of Finance, Stijn Van Nieuwerburgh, Associate Professor of Finance & Yamaichi Faculty Fellow, and Lawrence White, Robert Kavesh Professorship in Economics & Deputy Chair of Economics

Americans love the idea of a house and a white picket fence.

The United States spends more than $100 billion annually to subsidize homeowners. Renters get no breaks; homeowners get tons of them. Their mortgage rates are subsidized through the government-sponsored enterprises Fannie Mae and Freddie Mac; they get a big deduction on federal income taxes for mortgage interest payments and for state and local property taxes; and they even get favored treatment on capital gains from the sales of primary residences.

Americans love the idea of a house and a white picket fence. The government encourages ownership through housing subsidies, believing that it stabilizes communities. Owners see their homes as their share of the American dream, and their best way to save money.

Read full article as published in The New York Times