Because the next step from subsidized housing is to renting.
If we structured subsidizing housing programs such that they enabled people to save up for down payments, this creates a perverse incentive for normal renters to get into subsidized housing to accelerate their transition to home ownership. Any time you introduce a perverse incentive like this, you overwhelm the system as people who don’t need it start crowding out people who actually do need it.
Going straight from subsidized rental housing to home ownership doesn’t make sense. Going from subsidized rentals to non-subsidized rentals is the obvious next step.
in a perfectly efficient market, renting and home ownership costs exactly the same - not cheaper nor more expensive.
However, most home owners living in their home pay a premium for it, because they both want to secure their bid when they buy, and they are likely buying on more than just financial implications (like the location is great for their kids, etc). Therefore, a home owner is actually more likely to have a higher cost of capital over all - both the deposit and the mortgage added together, even if the mortgage interest by itself may be lower than renting.
Think of it this way - if renting was more expensive than the total cost of ownership, then an investor would borrow the capital needed for buying, and then rent it out and arbitrage the difference risk free. It is this mechanism that keeps the rent and the price of ownership at approx. equal.
In recent times, the price of ownership has grown due to the pandemic, and high availability of credit. Rent will follow, if it hasn't already, as landlords will not just eat the loss.
Which is not that far from the truth. At least on the UK, rent is an extortionary and ever-increasing tax on people who don’t have 150K to pay a deposit.
Why?
I mean that as a serious question. Housing costs in the US are absurdly front-loaded compared to renting, but they didn't used to be and there are other countries where they aren't. Why "should" housing be so expensive that six months or a year or careful saving on a living wage isn't enough for a down payment?
Nice bald assertion. It doesn't make sense to trap people in dependency, but I take it you're more comfortable with these programs failing in that direction...?
> this creates a perverse incentive
Which we already have, just with the reverse valence.
This is why I said I support means-testing the mortgage-interest deduction. People don't really understand things until they've been through them, and there's no good reason wealthier people shouldn't have to put up with similar paternalist nonsense for their handout.
Advancing your career in a way that should gradually decrease your dependance on government assistance instead cuts it off all at once, turning a raise into a massive pay cut, thus ensuring you don't climb the ladder and stay dependent on aid indefinitely. It's utterly perverse.
It also has a wealth cap, but that’s unrelated to the “make a dollar more and you’re done” idea that so many people hold, which is not how SSI income phaseouts work. The wealth cap is “you accumulate more than $2k at any one time, you’re done”, and that is different from making money resulting in a sudden loss.
It probably is not a great idea to have a wealth cap at any sort of a level that might be relevant to a middle-class individual. Someone shouldn’t have to destroy their safety net in order to qualify for benefits in the event they become disabled, and disability holders should not be barred from having enough cash to operate and to access the financial tools that would allow them to build their way out of poverty.
Maybe we could set a cap at $50k wealth or something but in the end who cares, if a few people in the top 1% end up using it that’s probably less costly than administrative costs of peering at everyone’s bank statements monthly.
Nor should there really be a wealth phase-out for benefits either imo. What is the benefit of making it harder for people who are just about to make the leap off welfare to actually take the leap?
A big reason why we have these perverse rules in the first place is that people are absurdly concerned with controlling people who accept (certain types of) public money.
If someone can find a path to jump from dependency to ownership, why "should" aid programs be structured to prevent that?
I, for one, would be a fan of imposing similar restrictions on other aid recipients, like mortgage-interest deduction-takers and enthanol producers. I suspect many folks would abruptly notice the absurdities with such rules.