The Bible, Home Ownership, and the Housing Crisis

In the wake of the mortgage crisis, a growing chorus of economists today questions the status of home ownership as the fulfillment of the American dream.  An argument supporting home ownership is found – of all places – in the Hebrew Bible.  Although usually read as part of a religious text, the Bible's economic prescriptions may be mined to recover the  roadmaps by which past thinkers navigated, even if no longer fully applicable today.

Economic commentators Paul Krugman and James Surowiecki argue that the American dream increasingly ends with a rude awakening. With the market value of houses falling, many Americans are now trapped in mortgages that exceed the value of their homes. And for many more, they argue, the hassles of buying and selling a home make it harder for underemployed home owners to move to where the jobs are.

But consider the original context of a touchstone of American political culture, the biblical inscription on the Liberty Bell in Independence Hall in Philadelphia: "Proclaim Liberty throughout all the land to all the inhabitants thereof." Contrary to popular conception, the verse in question, Leviticus 25:10, addresses neither despotic rule nor slavery, but is an economic prescription.  When read in the larger context of that biblical chapter it emerges as a call to ownership stability, part of an economic plan that was radical for its time.

Elsewhere in the ancient Near East, land was held chiefly by the kings and by the temples.  The Hebrew Bible, for the first time, sought to put the vast majority of landholdings into the hands of ordinary people.  Land -- the means of production in an agrarian society -- was apportioned to extended kinship groups. The vision was that you never dwelt alone, but as part of a deeply intertwined social fabric of extended kin.   If a landowner suffered crop failure, or illness, he could sell his land, but would then find himself alienated from his property with no means of getting back on his feet.  The Bible's solution was that every fifty years property was restored to the original owners: "Proclaim Liberty throughout all the land to all the inhabitants thereof, for the Jubilee year it will be for you, and each man shall return to his property and each man unto his kin."  The "Liberty" is from debt, and the prescription is for stability of property ownership in the company of one's kin.

The Bible sought to empower citizens by granting them equity.  The distribution of lands was similar in spirit to the Homestead Act of 1863.  Opening the Great Plains to mass settlement, nearly any person 21 years of age could acquire at virtually no cost a tract of 160 acres that would become his after five years of residence and farming. For 2 million new arrivals and other landless Americans, the Homestead Act was an opportunity to acquire assets and to bring equality of economic standing in line with equality before the law

But no less, these laws of land tenure sought to produce the social capital of community by legislating stability of property and household ownership.  In modern times home ownership correlates with greater participation in volunteer organizations, knowledge of local officials, voting in local elections, involvement with community problem solvers, and participation in communal religious practice.  The beneficial effects of household immobility for the community also accrue to its individual members. Economist Robert Dietz reports that children of homeowners are more likely to finish high-school and to have fewer behavioral problems in school, and that these conclusions hold up even when the data are controlled for parental education, marital status, and neighborhood characteristics.

Many would find a basis for civic order in the biblical commandment "Love thy neighbor as you love thyself." Yet that verse hails from the same source that contains the Liberty Bell inscription extolling ownership stability, and it is easy to see why. When both my neighbor and I make the relative sacrifice of immobility, invest in our neighborhood, and encounter each other regularly over a long period of time, we are more likely to rise to the noble calling of loving your neighbor as yourself.  Indeed, economists Edward Glaeser of Harvard and Bruce Sacerdote of Dartmouth find that homeowners are more socially communicative with one another than are renters.

James Surowiecki is right to emphasize the costs entailed by homeownership, particularly in terms of the mobility required to pursue work opportunities: British economist Andrew Oswald reports that a ten percent increase in homeownership correlates with a two percent rise in joblessness, in a study of several developed economies between 1960 and 1996.

But economic rationality alone does not provide us with the basis for the stability and vitality of post-industrial society. Rather, economic rationality needs to be leavened with an appreciation of the economic sacrifices necessary to foster notions of duty toward community and civic responsibility.

Homeownership is not for everyone at all times, as we now see all too plainly.  But it is sound policy to allow deduction of mortgage interest from taxable income and to provide discounted financing for home buyers through government sponsored enterprises such as Federal Home Loan Banks.  As the Hebrew Bible knew, relationships cannot be simply called forth, but must be nurtured. The stability of homeownership provides us with the social capital to build communities in an ethos of "love your neighbor as you love yourself."