Homeownership and Public Housing Policy

Housing economists have questioned whether current US tax and government mortgage policy actually fosters homeownership. In this paper we examine this question interms of a dynamic general equilibrium model with heterogeneous agents. The model allows households to make saving and shelter decisions. Households decide whether to rent or purchase (or sell). The owner and rental price of shelter are determined in separate markets. The supply of both private rental shelter and owneroccupied shelter is endogenously determined. The model is solved numerically and accounts for many of the observed shelter patterns and ownership rates observed in the United States. The model is then used to examine current tax policy and government mortgage policy