The answer to your question about subsidizing home ownership has nothing to do with economics and everything to do with the obsession of home ownership. Sometimes it makes economic sense, sometimes not. I bought my first house in the Carter era, paid almost 13% interest rate, and sold it 4 1/2 years later for about 10% (net) than I paid for it. Bad timing! Could have made more money investing the down payment, and I wasn't making that much money so the tax deductions weren't all that valuable. I was incredibly busy at work so the "joys" of homeownership were just a hassle. My wife liked it, though.

The problem with today's market is that everyone thought that real estate was a money making machine--not true. My present house in a a market which is tremendously overbuilt--tough to sell even before the crash in the market. There has been almost no appreciation in real estate prices in the last 4 to five years--OK for me, since I have owned the home 20 years, but murder for those who move in, move out.

And yes, the winners in this game were the mega-builders and the farmers who sold their land to the developers. And their buddies on the County Commission who couldn't say "no." The losers were people who had older homes and wanted to "trade up" but need to sell their older home for the equity. Every one wants a new home, despite the fact that they are often much more poorly constructed than a home that is older.