So just why is owning a home good? Here are several common reasons advocates give:

1. Economic benefits are achieved compared to renting, like the interest tax deduction.

2. Mortgage borrowing occurs at a relatively low interest rate.

3. A house can be like an investment if it appreciates.

4. It creates positive externalities, like better community involvement.

5. Once your mortgage is paid off, housing costs are limited to maintenance.

Above, the first two reasons aren't entirely honest. They are only benefits of home ownership because the government has made them so. The benefits the first point describes are due to various tax incentives provided to homeowners. The second is largely due to the government-sponsored entities helping to create liquidity by taking on much of the market's mortgage risk.

An argument for why the third reason doesn't always hold up can be found here. As the U.S. the housing market returns back to normal, home price appreciation will likely fall back to low levels. If you're looking for an investment, you can generally get a much better long-term return on other opportunities than on a home.

The fourth reason is somewhat doubtful, and refuted in this post by Felix Salmon. Like homeowners, long-term renters would also take pride in their communities. Any evidence otherwise would likely suggest more a correlation than causation relationship.

The last reason, however, is a solid one. It is, indeed, nice when you no longer have to make a mortgage or rent payment once you own your home. Of course, as homes age, maintenance costs increase. While it isn't likely that this would overshadow the cost of continuing to rent, renters don't have to worry about maintenance. Consequently, this benefit probably isn't quite as strong as it seems.

So home ownership does have some benefit. But it's pretty hard to argue that the benefit is so great that the government needs to heavily intervene in the market to ensure a high rate of homeownership.

Must the Government Prop Up Home Ownership?

But let's say you don't care if there's only a weak economic benefit to owning a house -- you think it's important from a moral standpoint. You believe most people should be able to buy their home if they can afford it. Do we still need all of these government incentives to make this possible?

A recent op-ed in the Wall Street Journal by Steven A. Blumenthal argues we do. He says that Fannie and Freddie should be fully nationalized and their charter essentially unchanged going forward. He believes:

Americans like getting commitments for 30-year fixed-rate mortgages and will never tolerate a situation where mortgages are simply not available--or not available at reasonable interest rates.

Is it really plausible that such a future would result if we eliminated the GSEs? It would be if there could be no private-label securitization market, or if banks never held non-insured mortgages on their balance sheets. Of course, both of those features do exist in our financial markets. Without the GSEs, they would just play a bigger role.