The Problem with the Housing Market is the Schools...

...and mortgage bailouts do nothing to address the root causes. According to the book, The Two-Income Trap: Why Middle-Class Parents are Going Broke , the policy whereby students are assigned to a public school based on their address meant that parents who want the best for their children will be forced to buy a home in a desirable school district. A second wage-earner gives the family an edge in competing for scarce homes. But when so many families send Mom to work, the result is that the price of homes is bid up so high that people buy houses they cannot afford, especially after the mortgage industry deregulation of 1980. A side effect is that families headed by single women are forced into deeper poverty, of not only money, but also opportunity.

How should families escape the trap? The book's authors dismiss what they consider to be both the typical conservative approach of living within their means and the typical liberal approach of more government regulation of the housing market.

In order to free families from the trap, it is necessary to go to the heart of the problem: public education. Bad schools impose indirect—but huge-- costs on millions of middle-class families. In their desperate rush to save their children from failing schools, families are literally spending themselves into bankruptcy. The only way to take the pressure off these families to to change the schools....Schools in middle-class neighborhoods may be labeled “public,” but parents have paid for tuition by purchasing a (very expensive) home within a carefully selected school district

Such parents pay tuition in two ways: first, the original mortgage and second, the increased property taxes generated by these overpriced mortgages.

Any policy that loosens the ironclad relationship between location-location-location and school-school-school would eliminate the need for parents to pay an inflated price for a home just because it happens to lie within the boundaries of a desirable school district.

The authors believe that vouchers may be the answer, but not vouchers as currently conceived and hotly debated today. They believe the problem lies in framing the issue as “public-versus-private rift” and that a comprehensive voucher program based a parental choice is essential.

Local governments could enact meaningful reform by enabling parents to choose from among all the public schools in a locale, with no presumptive assignment based on neighborhood...Tax dollars would follow the children, not the parents' home addresses, and children who live in a (less expensive) house would have the same educational opportunities as those who live in a (much more expensive) house.

Open enrollment is already policy in many school districts. Open enrollment is not necessarily tied to a comprehensive voucher program. I am curious to find out if open enrollment helps to put a brake on the overheated housing market as the authors contend. Or perhaps the US could do what Japan does: all taxes go into a central pot fromwhich they are distributed nearly equally to fully fund schools no matter the tax base of the school's neighborhood. Even as it is common knowledge that studies (cited by the authors) show that many Americans believe the American education system, especially in the public schools, is failing, there are also a number of studies that, intriguingly, show it is all a matter of how the questions are asked. When Americans are asked about the school their own child attends, they uniformly say the school is doing a good job, for just one example, this report from ADDitude . My child goes to a good school; everybody else's child goes to a bad school. Such a perception will naturally stand in the way of any meaningful education reform to benefit all children.