Why Is Housing Different?
Whenever the cost of food, gasoline, electricity, tuition, cars or any of  life's other necessities or luxuries goes up, we bemoan the fact and the media  present it as a misfortune making it harder for the average Jane and Joe to get  by. Nobody roots for the cost of living to go up, right?  Well, not quite.  The  exception is, of course, the cost of housing -- the most expensive necessity of  all for most of us.

The easy explanation for this is that in rich countries most  people own their homes (about 67% of US housing units are owner-occupied), so  most people tend to root for housing prices to go up -- something they'd be unlikely  to do for the price of, say, gasoline, unless they owned an oil well. This was  particularly evident during the residential real estate bubble leading up to  the 2008 bust and during its aftermath. Not only were home owners thrilled with  the rise in value of what for most of them was their biggest asset, many -- if  not most -- were happily borrowing against that increased value to subsidize  their consumption. The subsequent drop in average residential real estate  prices was widely publicized as an international disaster, often with the strong implication that government should step in to rescue us from low housing costs.

But short of borrowing against a property and then defaulting on the loan,  the only way for the owner of an appreciated home to realize his gain is to  sell the property to someone else. For every additional dollar that a seller of  residential real estate gains on a sale, a buyer's cost of acquiring a place to  live goes up by a dollar. And only by "downsizing" can the seller  really benefit from the high-priced sale of his property because he, in turn, will need to acquire another place to live.

The net benefit to a national economy of rising real estate prices is thus precisely zero.  Why are US taxpayers forced to pay to prop them up, thus raising the cost of living for everyone?