Is subprime market reducing home ownership?

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Most recent commentary on the subprime market looks to removing abuses from that market -- not shutting it down. Underlying this note of caution is an assumption that, while a lot of bad things have happened in the subprime market, on balance it serves a socially useful purpose. While foreclosures are too high, the market has made home ownership possible for many who could not have achieved it otherwise. But this assumption has now been challenged. The Center for Responsible Lending, an influential consumer group, claims that the subprime market causes a net loss in home ownership. (See Subprime Lending: A Net Drain on Homeownership, available at This implies that if the subprime market were shut down, home ownership would rise, a startling claim that deserves careful scrutiny. To determine whether the subprime market increases or decreases home ownership requires a comparison of two numbers. The first is the number of homeowners who would not ...