Not Everyone Should Own a Home - WSJ.com

Not Everyone Should Own a Home

It begins,

Maybe only a friendly foreigner could say this. But America needs to realize that not everyone can own a home. The American Dream of home ownership for all is a fraud. Politicians who pimped this dream created an unsustainable mortgage industry whose collapse is only surprising because it didn't happen earlier. America's mortgage industry will not recover, nor deserve to recover, unless it is prepared to challenge this politically unpalatable reality.

I agree.  Not everyone can or should own a home.  For all sorts of reasons.  But that doesn't mean that those who don't own homes aren't entitled to their per capita share of America's growth, or that one's share of America's growth should go disproportionately to those who own our choices sites -- be they residential or commercial, one home or 10 properties or 50 properties.

We need to examine this with a megapixel lens.  Most of us have not acquired the necessary lens yet -- even many college-educated and even PhD economists.

We ought to have affordable housing for all, but that isn't the same thing as homeownership, as recent events have clearly shown.

We can all share in that which we attempted to broaden the sharing by means of increasing homeownership by a few percentage points.  But it shouldn't just be homeowners who share in the increase in land value that a healthy economy produces, and the land value which ought to be shared ought to include not only single-family and condo residential land value, but also the choice urban sites occupied by apartment buildings, commercial properties, and even our universities -- and owned by REITs, private equity funds, corporations, family partnerships, endowments, pension funds, foreign and domestic investors, Subchapter S and other structures.  ALL that land value rightly belongs to the community.  We should all be benefiting from it.

How do we make that real? We shift our taxes onto the value of land.  We use that revenue to fund the services which can more logically or economically be provided by governmental entities.  Reduce the taxes on wages and on sales, and even on profits.

When we do this, one of the responses of the market will be to put choice land to better use, and one of those better uses will be housing, including modest homes people can afford.  Another effect will be to lower the selling price of land, which represented over half of the price of the average home in the top 46 metro markets in 2004, according to a Federal Reserve Board study. Selling prices will come down, and the amount one must borrow to own a home will be roughly the value of the building itself; one will pay land value tax to one's community instead -- and that payment will replace one's sales and income taxes (a solution far better than the badly named "FairTax").