Published online by Cambridge University Press: 05 July 2014
For years, U.S. political leaders and governmental agencies have supported campaigns that were designed to educate renters about the value of homeownership and the benefits of living in a single-family home. Even though the U.S. government has encouraged and extolled homeownership since the eighteenth century, the federal government’s role in the housing market was largely passive until the twentieth century, and the United States did not actively participate in mortgage finance markets until the Great Depression. The economic consequences of the Depression, including widespread bank failures, skyrocketing unemployment rates, and record foreclosures caused the government to intervene in the private housing finance market with the explicit goals of stimulating home sales, reducing the risk of borrower default, protecting the stability of banks, and keeping home sales high. The government has continued to subsidize homeownership by guaranteeing private mortgage loans, buying private mortgage loans in the secondary market, and providing tax benefits for people who buy and occupy houses. In addition to these financial subsidies, the United States increases the attractiveness of homeownership by giving homeowners the power to exclude certain types of property uses – and frequently certain types of residents – from their neighborhoods.