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More Mortgages, More Homes? The Effect of Housing Financialization on Homeownership in Historical Perspective

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  • Sebastian Kohl

Abstract

Recent research has emphasized the negative effects of finance on macroeconomic performance and even cautioned of a “finance curse.†As one of the main drivers of financial sector growth, mortgages have traditionally been hailed as increasing the number of homeowners in a country. This article uses long-run panel data for seventeen countries between 1920 (1950) and 2013 to show that the effect of the “great mortgaging†on homeownership rates is not universally positive. Increasing mortgage debt appears to be neither necessary nor sufficient for higher homeownership levels. There were periods of rising homeownership levels without much increase in mortgages before 1980, thanks to government programs, purchasing power increases, and less inflated house prices. There have also been mortgage increases without homeownership growth, but with house price bubbles thereafter. The liberalization of financial markets might after all be a poor substitute for more traditional housing policies.

Suggested Citation

  • Sebastian Kohl, 2018. "More Mortgages, More Homes? The Effect of Housing Financialization on Homeownership in Historical Perspective," Politics & Society, , vol. 46(2), pages 177-203, June.
    • Handle: RePEc:sae:polsoc:v:46:y:2018:i:2:p:177-203
    DOI: 10.1177/0032329218755750
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    Cited by:

    1. Chen, Jie & Wu, Fulong & Lu, Tingting, 2022. "The financialization of rental housing in China: A case study of the asset-light financing model of long-term apartment rental," Land Use Policy, Elsevier, vol. 112(C).
    2. James Wood & Engelbert Stockhammer, 2020. "House prices, private debt and the macroeconomics of comparative political economy," Working Papers PKWP2005, Post Keynesian Economics Society (PKES).
    3. Engelbert Stockhammer & Christina Wolf, 2019. "Building blocks for the macroeconomics and political economy of housing," Japanese Economy, Taylor & Francis Journals, vol. 45(1-2), pages 43-67, April.
    4. Josh Ryan‐Collins, 2021. "Private Landed Property and Finance: A Checkered History," American Journal of Economics and Sociology, Wiley Blackwell, vol. 80(2), pages 465-502, March.
    5. Bram Hogendoorn & Juho Härkönen, 2023. "Single Motherhood and Multigenerational Coresidence in Europe," Population and Development Review, The Population Council, Inc., vol. 49(1), pages 105-133, March.
    6. Bloom, Aretousa, 2024. "Labour, financialization, and rent in the construction industry: towards a hybrid framework of accumulation," LSE Research Online Documents on Economics 122077, London School of Economics and Political Science, LSE Library.
    7. Renaud Le Goix & Laure Casanova Enault & Loïc Bonneval & Thibault Le Corre & Eliza Benites‐Gambirazio & Guilhem Boulay & William Kutz & Natacha Aveline‐Dubach & Julien Migozzi & Ronan Ysebaert, 2021. "Housing (In)Equity and the Spatial Dynamics of Homeownership in France: A Research Agenda," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 112(1), pages 62-80, February.

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