Tyler Cowen observes:
There is a very good (modern) liberal case against more home ownership: behavioral economics is true, people overestimate their prospects, poor people shouldn’t take too much risk, and the natural market tendency is too much home ownership, not too little. That’s without taking environmental issues into account.
But you really should take the environmental issues into account! The issue here isn’t well-understood, but it’s pretty clear-cut. A home, when owned as opposed to rented, is in part a savings vehicle. An investment. When you subsidize homeownership you are, among other things, encouraging people to save in the form of housing rather than stocks or bonds or whatnot. At the margin, this causes people to live in larger houses than they otherwise would have. That increases the amount of energy it takes to heat the house. And it increases the amount of energy it takes to cool the house. And it increases the amount of energy it takes to provide light to the house. And it increases the distances between stuff, pushing people to drive further.
This isn’t the biggest environmental problem in the universe, but it’s an unusually senseless one. Absent the subsidies there’d be nothing stopping people who really wanted to live in big houses from buying them.