Reconsidering ownership

By The Daily Progress

Published: October 25, 2008

While others are analyzing the short- and long-term impacts of the financial crisis, let’s take a look at a philosophical dimension of the problem, as raised by University of Virginia professor David Leblang.

“I wonder to what extent we have gotten too consumed by this notion of home ownership,” he said recently at the Miller Center.

A long chain of causes, consequences and collateral concerns could of course be cited in connection with the meltdown, but for purposes of this discussion we’ll start here: With Washington’s initiative to put more low-income Americans into homes of their own.

It seemed like a good idea, from both sides of the political spectrum. Liberals wanted to ease the burdens of the poor by making it easier for low-income families to buy homes. Conservatives saw home ownership as an incentive to help low-income buyers develop personal responsibility and stability, as they learned to care for their homes and sent stronger roots into their communities.

But lenders — by federal legislation, and with Freddie Mac and Fannie Mae setting the pace — gave loans to poor-risk borrowers who had little hope of paying back the money.

And in too many cases, borrowers did not, as conservatives expected, use ownership as a spur to better jobs, more careful money management and upward mobility — which would in turn have helped them pay those mortgages.

There were other factors in the financial meltdown, of course. Middle-class borrowers also contributed by buying homes beyond their means and by speculatively staking their futures on adjustable rate mortgages, for instance.

At the corporate and government levels, lenders’ practice of trading and buying mortgage paper in a speculative manner also fueled the eventual meltdown, as did a lack of accountability at Freddie, Fannie and other institutions.

Furthermore, in many cases it was not the home owner, as traditionally understood, who was at fault. The owners were actually the lending institutions. Society’s good, and government’s goal, centered on getting people to own homes, not owe on homes.

But we are intrigued by Mr. Le-blang’s observation. It is worth asking whether, in the modern world, home ownership provides the anchor that conservatives have assumed. Has society changed so much that ownership no longer fills its old role of stability?

For an agrarian society, land supported the family, with food and saleable produce. In a suburban society, homes were the stable center for the family.

Now we are a transient society, moving from job to job, school to school, apartment to house to condo. We form communities online, but barely know our neighbors. Where we live may be less an anchor, and more a way station.

Societies still need stability, anchors that prevent the changeable currents from carrying us too far away from each other.

Still ...  Is home ownership still an effective way to create that stability?

And, if so, how does government intend to promote that goal in the future — in balance with common sense and without sacrificing the financial stability so fundamental to a healthy economy?