A Novel Approach To Solving The Housing Crisis

The economy and the housing crash is on everybody's mind these days and it's getting plenty of media coverage. I couple of weeks ago Bush published his draft FY2009 budget and I had a question. Is it possible for the government to provide free housing for all of its citizens?

The implications are twofold. One, the imminent impact on quality of life for individuals to currently do not have the luxury owning their own home. The second are the ramifications of an economy in which its individuals do not spend half of their income on housing. The extra money could go towards necessities, education, insurance or services and entertainment.

But is it possible?

According to Wikipedia (which gets its data from the Census Bureau), the population of USA is just over 300 million. Of that 300 million just over 60% are aged 20-64, or 180 million. Now, if we assume that people are divided equally over that range and that almost everybody gets married between the ages of 20 and 33, we come up with 28 million couples between the age of 20 and 33 (180m*14/45, divided by 2). For the sake of brevity, let's assume a stable population growth. As a result each year 2 million couples get married.

So now the question becomes, can the government afford to purchase housing for 2 million newlywed couples every year?

According to the FY2009 Budget, Bush has requested $1009 billion on discretionary spending. This is the governments "disposable income", if you will. This typically goes towards things like Medicare, military, etc.

Now according to economagic, the average house price in December 2007 was $300,000. At that price 2 million homes will cost $600 billion. This is well within the $1009 billion Bush wants to spend for FY2009.

I think the government should provide free housing. With an increased tax rate, it wouldn't be that difficult. It's a fundamental requirement of man and next to food probably the most important. But, it's the most expensive, so why not?