Is this the Housing Market You Would Chose?

Jan Raymond
3 min readJan 7, 2023

Owning your own home is a bedrock of financial security for working folks. No useful purpose is served by Financial Corporations buying houses so they can sell at a profit, other than allowing the rich to get richer. But ever since the 1995 Republican tax cuts made making money off selling houses more tax advantageous than actually working for a wage, even big corporations have increasingly been moving into the single family housing market seeking profit.

Before 1995 you could buy a house when you were young, as your family grew you could trade up without tax consequences as long as you put the proceeds of the sale into your new home. When you were over 55 you could then downsize and pull some money out of your home that one time for your retirement years. Those tax provisions only applied to homes that people lived in, so the taxes from investors selling a home they didn’t live in made speculation in the housing market not particularly profitable as you had to pay Capital gains tax on your full gain each time you sold a house (This did not affect peaple in the business of building homes).

Those tax provisions provided decades of the rising home ownership in the US along with rising incomes. But in the early 1980’s the home owndership rate began to dip after Ronald Reagans introduced trickle down economics as our guiding tax principle. Working wages began to deteriorate so home ownership rates sunk to a stable lower level of ownership.

The next Republican dim bulb idea was 1995 tax cuts that threw out the ability to roll over your equity into a new house. Instead it set up dollar figure you could exclude from captial gains taxation for each sale, and also created more favorable captial gains tax rates and avenues for non-homeowners to seek profit in buying and selling existing homes. Instead of favoring homeownership the tax cuts tilted policy toward favoring speculation.

Although between 1995 and 2006 home ownership expanded it was accompanied by historically rapid inflation in house prices as homeowners found themselves competing with flippers and speculators and paying a bigger and bigger percentage of their income to buy a house. In 2006 the bubble collapsed and we sunk into the Great Recession. The homeownership rate sunk to a level not seen since 1963, and in the process a lot of people lost their house to foreclusure or lost big chunks of money.

However, although house prices dropped after 2006, they did not drop as much as homeownership because, investors and big corporations began to see money to be made by outbidding homeowners for houses, then jacking the price up and selling.

Because we never solved the problem of stagnating worker incomes to keep the economy going after the Great Recession the Fed kept dropping interest rates to stimulate the economy. About 2016 interest rates got so low house ownership began rising again — rapidly as interest rates continued to drop — to a new all time high in 2020 but house prices rose even more rapidly due to speculators using the low interest rates to seek the middle man profit. Since 2020 housing ownership rates have turned down again. But house prices have stayed high as investors looking for long term profit bought homes.

Now even the investors are stepping back (see link below).

This not good for the long term health of this country. As the last 100 years economic history demonstrates, trickle down economics stagnates economies by impoverishing vast numbers of the people who actually spend money to drive an economy. The economy should be running on a trickle up theory. The stability and security of owning a home is a huge factor in maximizing a healthy economy. Take care of the workers/consumers at the lower end of the economic spectrum and let the wealth trickle up. We will end up with a bigger, healthier economy.

Republican tax policies since Ronald Reagan have created an economy where the National debt has grown faster than the economy, largely because of Republican’s threw out the tax laws that worked great for half a century years.

For homeownership statistical compilations see,value%20of%20homes%20on%20average.



Jan Raymond

After being a practicing lawyer I started a legislative research business. My perspective derives from years of research on the politics of legislation.