This Economist article frames an argument discussing the positives and negatives of home ownership, and exposes some myths about it as well. I think it's a good read for anybody considering the merits of home ownership as well as policy makers in favor of housing subsidies. I believe, as the article states, that lots of Americans have become too dependant on their home equity as a source of investment and savings to the extent that many do not invest in other assets.
This is potentially a bad idea for several reasons: 1) insufficient diversification 2) as more people buy and sell homes more often, the housing market becomes more volatile 3) by purchasing homes "on margin" any downard shift in the housing market is magnified in terms of losses incurred.
Fortunately for many, there have been relatively few dramatic downward shifts in the housing market. As we see from the crash of the recent housing bubble, downward shifts do happen. People should take the necessary precautions to ensure that when housing market downturns occur, they have other savings.
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