Washington’s involvement in the real estate industry is quite substantial every year, totaling hundreds of billions of dollars in direct expenditures and tax breaks.

A new report from the nonprofit organization Smart Growth America says federal financing and spending on real estate totals about $450 billion annually. This investment by the government ranges from loan guarantees to commercial tax credits, and helps Americans with things such as rent, first-home purchases and assistance for business development. A majority of the expense is a result of direct loans and loan guarantees. By far the largest program—at about $220 billion a year—is the Federal Housing Administration’s single-family loan program. Mortgage interest tax deductions come in at about $66 billion a year.

“This spending has an enormous impact on the U.S. real estate market,” Smart Growth America said in a prepared statement. “Though usually viewed as a ‘free’ market, the U.S. real estate sector is heavily influenced by direct and indirect government intervention.”

But the impact has been “uneven.” Too often federal dollars aren’t allocated sufficiently to help those in “small multifamily buildings,” where most renters live.

“Viewed as whole, federal funds are not targeted to those most in need, are not targeted to strengthen existing communities and are not targeted to places where people have economic opportunities,” the group concluded.

-Noel Brinkerhoff

To Learn More:

Federal Involvement in Real Estate (Smart Growth in America)

Federal Involvement in Real Estate: A Call for Examination (Smart Growth in America) (pdf)