Emily Badger discusses the findings of "Federal Involvement in Real Estate," the vital new report released today by Smart Growth America that explores the extent to which the U.S. real estate sector is "heavily influenced by direct and indirect government intervention."
"Smart Growth America’s report counted 50 federal programs that lean on the real estate scales in some way, whether through tax credits like the home mortgage interest deduction, loan guarantees through the Small Business Administration or Federal Housing Administration, or grants for low-income housing," notes Badger. The report did not account for investments by Fannie Mae and Freddie Mac or federally owned real estate. Nor did it assess spending on infrastructure, from highways to water treatment, that have a substantial impact on real estate location and viability.
What's clear in the aggregate is that the United States is unclear in its real estate investment policy: "Some programs seem to have outlived their original intent, while others are now working at cross purposes with today’s market demand." Despite no discernable overall strategy, "it’s clear that the federal government has favored many types of development at the expense of others." For instance, says Badger, "[t]he government dramatically favors homeowners over renters. Its support is heavily skewed toward single-family homes over multi-family developments....The mortgage interest deduction – a program first created in 1913 with the ostensible aim of boosting homeownership – curiously encourages investments in second homes."
Smart Growth America stops short of making qualitative judgements about the programs its report details. But in trying to start a conversation about the federal footprint in real estate, the study's implicit criticism "isn’t that Uncle Sam intervenes, but that he intervenes ineffectively."
"Are we really achieving what we want?" Geoffrey Anderson, the president and CEO of Smart Growth America asks. "And do we even know what we want to achieve?"