If we look at the evolution of mankind and property ownership, it is evolved from no property rights to community property rights to individual property rights. Except mountains and marshy soils, the remaining 95% of the land is owned by 7% of the global population and the rest 5% of the land owned by next 50% of the global population. At least 40% of the global population does not have any property rights. Irrespective of government incentives, 30% of the population will own land or real estate, because land and home ownership is directly proportional to owner’s social status.

Also, am under the opinion that, in order to protect the interests of the 30% of the elite from the rest of the 70%, and / or to create an incentive system for the rest of the 70% population to integrate into the fabric of the society, and / or to create an easy opportunity for creation and distribution of wealth, and / or to accelerate economic growth and to innovate the building products, materials and appliances, the policy makers created a concept of tax incentives and low interest mortgages.

The questions are as follows:

(1) If we restrain the lender to sell long term mortgages in the market, lender need to have a huge amount of capital resources and loose the risk diversification opportunity. In this highly mobile and volatile economic situation, it is very difficult to predict the risk beyond 7 to 10 years. How can we convince a lender to provide a 20 or 30 or 50 or 70 or 100 year loan and restrict to sell only short term mortgages in the secondary market?

(2) Hypothetically, if we convince the lender to offer a 50 year loan with a restriction to sell only short term mortgage in the secondary market, the existing construction methods and materials won’t last for 40 – 50 years time. Which means the underlying asset will lose value faster than the loan repayment. Also every house contains a substantial amount of plant and equipment like faucets, electrical appliances, windows and HVAC machines etc would depreciate faster than the super structure. How can we handle this situation?

(3)Do we need to build the houses with a solid super structure with high quality plant and equipment, to retain the asset value for long time? Or build houses with low cost materials coupled with dynamic zoning regulations to supply more land to reduce the total cost of the construction and cost of the land respectively?

(4)The proposed changes would increase or reduce the national GDP?

Although some renters take great pride in the place they inhabit and improve it by planting flowers and keeping it and its surroundings clean and neat, many don’t. An area with a greater proportion of home owners than renters often has a better overall appearance, which I think encourages renters to live up to the example set by the neighbors. Home owners invest in their property with improvements, while landlords often do not. Therefore greater homeownership in a neighborhood generally leads to rising property values (or more stable property values), while a large proportion of landlord-controlled housing may not if investments in appearance and maintenance aren’t made. Furthermore, I would expect that home owners tend to have higher incomes than renters, which would improve a municipality’s income tax base.

Rising property values, a stable population — these increase tax revenues and can attract and support nearby businesses, further increasing and diversifying tax revenues. On a local level, downtowns of cities such as Baltimore are examples where government policies encouraging homeownership and owner-occupied residences have made a huge difference in the quality, value and stability of once blighted neighborhoods and undoubtedly provided some support to the city’s tax revenues over time. The last few years created a bubble in many of these areas because of “investors” purchasing houses or condo units with little or no understanding of the area or what a reasonable price should be, in my opinion, but at its core, home ownership and owner-occupied residences (very importantly) make for a stable and inviting neighborhood.

Baltimore very effectively revitalized their downtown in part by offering dramatic incentives 20 or 30 years ago for people to purchase, renovate and live in then-dilapidated and abandoned row houses. (The investment in the Inner Harbor, etc., let those pioneers know the city, state, and likely feds had some skin in the game as well.)

I don’t believe the goal is for everyone to own a home, but for there to be “enough” homeowners to provide stability to any given neighborhood and for the possibility of home ownership to be real for those interested in it. Anyway, this is one possible explanation that certainly can explain local governments’ policies.