George Will

Homeownership is, up to a point, a barometer of social health: Ownership deepens an individual's sense of having a stake in the health of the neighborhood and the larger community. Today, 67.8 percent of households own their homes, up from 65.9 percent 10 years ago and 63.7 percent 15 years ago. There are, however, limits to how high the rate can rise: Not everyone wants or can afford to own. And there are prudential limits to how high government should drive ownership by, for example, pressuring lenders to satisfy borrowers who have questionable qualifications.

As housing legislation perhaps heads for a rendezvous with the president's veto pen, remember that the object of the policymaking exercise is not justice -- or compassion, which is not the same thing -- for this or that category of lenders or borrowers. Rather, the main point of the exercise is to mitigate bad consequences for two categories of innocent bystanders.

One category consists of those who live in proximity to foreclosed homes. Unoccupied houses become subject to decay and vandalism, thereby letting loose the infectious disease of blight that depresses the values of properties in concentric circles.

The other category consists of everybody. Seventy percent of economic activity is personal consumption, which recently has been fueled by the "wealth effect" -- people spending because they feel wealthier due to the appreciation of their largest asset, their house. So "stabilizing" -- i.e., putting an artificial floor under -- housing prices may be necessary to fuel consumption by a public that in the 1980s saved almost 10 cents of every dollar it earned, and in the 1990s saved a nickel, but recently has had a negative savings rate. This will, however, injure some innocent people, such as those young couples waiting to become homeowners. And it will benefit others who have earned an injury, such as speculators and others who bet that the prices of houses would never decline.

Everyone knows that there is only one commodity the price of which always rises -- major league pitchers. Concerning the market for them, Congress should do something.

George Will

George F. Will is a 1976 Pulitzer Prize winner whose columns are syndicated in more than 400 magazines and newspapers worldwide.
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