03/18/2010 05:12 am ET Updated May 25, 2011

Housing Market Buoyed By $300 BILLION In Government Aid: CBO

A new report from the Congressional Budget Office attempts to put a number on the amount of money the government has poured into the housing market. Considering the complexities associated with the bailout of Fannie Mae and Freddie Mac, this actually isn't as easy as it sounds. But, the final -- and rather disturbing -- tally for 2009 is $300 billion.

Unfortunately, only $60 billion of that amount was dedicated to helping renters. Here's the CBO:

Most of the federal government's support for housing is provided for homeonwership (see Figure 1). In 2009, the federal government devoted almost four times the amount of budgetary resources to homeownership (about $230 billion) as it devoted to improving rent affordability ($60 billion). The government supports home ownership by subsidizing the costs of owning a home (reducing down payments, mortgages insurance costs, and tax liability) and increasing the availability of mortgage loans. Until recently, the bulk of federal support for homeownership took the form of tax expenditures, which make it less expensive to own a home by reducing taxes for homeowners and investors.

All of this massive housing aid, coupled with the takeover of Fannie and Freddie, means the federal government is now the world's biggest real estate investor. From the CBO's report: "Now that Fannie Mae and Freddie Mac are in conservatorship, the federal government is effectively assuming the risk on the mortgages that they guarantee."

Worse, the CBO finds, that long-term pattern of the government's housing aid hasn't made homes any more affordable:

Federal housing policy has long aimed to increase the rate of homeownership and, to a lesser extent, make rental housing affordable for low-income families. The nation has made more progress on the former goal than on the latter. Homeownership rates increased steadily throughout the 1990s and early 2000s, peaking in 2004 at just under 68 percent of all households ... However, the proportion of households paying more than 30 percent of their income for housing--an amount that is often categorized as unaffordable in light of households' other needs--increased steadily from 1997 to 2007. The burden of housing's costs is more pronounced among renters than among owners: In 2007, 45 percent of renters (compared with 30 percent of owners) paid more than 30 percent of their income for housing.

Justin Fox at Time puts it this way: "So by turning homeownership subsidies into another middle class entitlement, we've actually made housing less affordable for lots of Americans. Brilliant!"


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