Through the Roof: Housing Markets, Capitalism, and the Politics of Government Intervention
Increasingly unaffordable housing markets and growing wealth inequality have shifted attention to the role of governments and public policy in the housing markets of advanced economies.
Why do some countries subsidize homeownership while others do not? My book project examines the politics of homeownership support in the United States and Germany from a comparative, historical perspective.
It is hard to overlook the vast presence of the American state in the homeownership market. From the Great Depression, U.S. governments have developed an elaborate state-based architecture supporting the country’s housing market, consisting of large tax breaks for homeowners and government guarantees that underwrite large parts of the multi-trillion-dollar mortgage market. In contrast, German policymakers initially subsidized rental housing and homeownership to rebuild the country’s housing market in the early postwar decades, offering homeowners large-scale tax breaks and subsidies as part of social housing programs. However, they successively scaled down these longstanding homeownership programs over time. Today, American government support is unparalleled, while Germany’s is much more limited.
Drawing from extensive fieldwork, the book offers a historical argument about how different macroeconomic growth regimes shaped distinct policy coalitions that explain these contrasting policy trajectories. In the demand- and credit-led U.S. economy, where housing is key to growth, a longstanding bipartisan coalition of politicians, supported by housing interest groups, established, defended, and extended homeownership policies. Over time, these dynamics have resulted in the expansion and entrenchment of homeownership support in the name of promoting consumption, credit, and growth in the United States. In Germany’s export-oriented economy, housing is less central to the economy, particularly once the country’s postwar housing crisis subsided. Over time, this facilitated the development of a broad-based political coalition that successively retrenched homeowner subsidies in the name of fiscal consolidation and structural reform to boost competitiveness.