Is that a Fact?

And if you look at just the number of owner occupied homes (thousands) ...

1965 ... 36,230
1970 ... 40,834
1975 ... 46,463
1980 ... 52,223
1985 ... 56,152
1990 ... 60,248
1995 ... 64,739
2000 ... 72,593

The number of owner occupied homes doubled between 1965 and 2000 while the US population increased just 45%. It would be interesting to know the homeowner equity in those 72+ million homes.

I'm not so sure I would call it a subsidy. The S&L's were able to make mortgage loans at fairly low rates because the rates S&L's and banks paid depositers were limited by regulation. So the low mortgage rates were at the expense of small savers.

I quickly googled historic mortgage rates and see a steady increase begining in the 1770 (7.5 avg) continuing to ramp up to 11.2 (avg) in 1979.There is a rapid 3 year increase until '83(avg around 16.5, but year ending at 13.6) then the rates continue down from around 13.6 to 9.6 around '90. This doesn't (to my uneducated eye) to indicate any real problem (particularly long-term) with deregulation, but seems to follow inflation and high interest rates of the period.

Also, can someone explain what the subsidy was (I am too lazy to google more)? Thanks.

Bernard points out the subsidy. It wasn't direct out of the government's general fund of course! But regulated interest rates and tax policies accomplished the same thing.

When I was a kid in the mid-70's, banks paid 5% on passbook accounts and S&Ls paid 5.25%. Being from a thrifty farm family, of course we saved at an S&L. S&Ls could still be profitable even with higher passbook rates because they were not taxed on profits as banks were. In essence, they were mutuals. However, they were prohibited from commercial lending.

It was the bad old days, for a host of reasons. But that doesn't keep some people from waxing nostalgiac for them.

Raw data (30-year conventional mortgage rate) is available here with a nice chart (1970-2004) here courtesy of the St. Louis Fed.

And if you're really interested in numbers and charts, FRED II "a database of over 3000 U.S. economic time series" is available here.

I do not think regulation Q subsidized housing.

What Reg Q did was introduce non-price competition in the mortgage market. Under Reg Q when rates exceeded the ceiling the supply of mortgages was turned off --the supply fell almost to zero. What this meant was that the impact of a Fed tightening kicked into the housing market with a vengence when rates rose above the ceiling.

The removal of Reg Q meant that the supply and demand for mortgages became strictly a function of price in a relatively free market. What we found was that the price elasticity of demand for mortgages was much lower then generally expected. Consequently, in the late 1970s- early 1980s interest rates had to go much higher then anyone had expected for fed policy to dampen housing and the economy. PS., this was the real reason behind the S&L disaster -- everyone had assumed that there was little rate risk for the S&Ls as it had been under REg Q but without Reg Q that was not true.

Reg Q but a ceiling on mortgages, so in that way it subsidized housing. But the consequence was that the supply at the higher rate was near zero. I would not call that a subsidy.

A hunch--the stable/slightly falling homeownership rate in the 1980s followed by the increasing rate in the 1990s and 2000s reflects the life cycle of the baby boomers. Many boomers were still young in the 80s and rented rather than owned. By the 90s aging boomers put down roots and bought homes.

User costs, baby, user costs. Tax rates do influence these -- but they are mainly driven by interest rates and expected home price appreciation.

yes, I do have a paper.

Slightly off-topic: While it's mostly stupid to subsidize homeownership, there may be a hidden benefit. The more people own land, the more people have a stake in land values staying high or rising. And one thing that drives up land values is immigration. This should, in theory, offset the bias against immigration that results from the median voter's lifetime resources being concentrated in labor. Whether things go that way in practice, or will in the future, I'm not sure.

It is interesting that I'm seeing arguments here that subsidizing home ownership is bad by many of the same people that are using almost identical arguments in favor of private social security accounts.

Subsidizing housing has both good and bad consequences. One benefit is to give individuals a stake in the mixed capitalist system, and on balance that may very well be a good trade off.
Subsidizing private SS accounts may have similiar benefits.