Dear US, Make People Pay for Their Own Houses

Fannie Mae and Freddie Mac announced last month they would guarantee mortgages for first-time home buyers who put down only 3%. It's another move by the US government to encourage homeownership—along with tax breaks, mortgage-interest deductions, property tax write-offs, etc.—and must be a good thing, yes? Not so fast, writes James Surowiecki at the New Yorker. He takes issue with the government's never-ending push to get people to buy homes, arguing that it might end up hurting both the homeowner and the general taxpayer.

"The main impact of the mortgage-interest deduction and other subsidies is not that they get people to buy houses," he writes. "It’s that they get people to buy bigger, costlier houses than they otherwise would." Plus, the subsidies not only inflate housing prices, they "lead Americans to overinvest in housing and underinvest in other kinds of assets." And couldn't the government find better uses for taxpayer money, say in education or medical research? "A big house may be great for the people who live in it," he writes. "But should taxpayers really help foot the bill for their mortgage?" Click for the full column. (More mortgage stories.)