Maggie's Farm

Long-term mortgages may or may not be a good idea, but they do have willing sellers and buyers. In most of the world, mortgages are either rare or very short-term, ie 5 years, and are not tax-advantaged. From Forbes:

A 2005 paper by Adam Gordon describes the effects of federal mortgage policy from the 1930s until the 1960s. Congress created the Federal Housing Administration in 1934, and gave it the power to provide mortgage insurance to housing lenders. At the time, state and federal regulations strictly limited the kinds of mortgages banks could issue, which meant that mortgages were short—often as little as 5 to 7 years—and came with down-payments of between a third and half the value of a home. In the 1930s, the FHA convinced all 48 states to relax these rules for FHA-backed loans, arguing (correctly) that such loans were not as risky since they had the backing of the federal government. But most states did not liberalize the rules for banks with private mortgage insurance. In practice, this meant that FHA-backed loans were the only 30-year, low-down-payment loans on the market, giving the FHA de facto power to decide who would be eligible for such loans.

and

The FHA’s standards became a self-fulfilling prophesy. Young, upwardly mobile families in the market for a first home (at least the white ones) went where they could get the best deal, and thanks to federal guarantees that was the suburbs. Meanwhile, urban areas were starved of capital thanks to state laws that banned private parties from making long-term loans in those areas. Not surprisingly, suburban home construction boomed during this period, while urban areas stagnated.

The FHA and the mortgage interest tax deduction introduced giant distortions into housing markets. Just add "free" government highways to the mix, and you get what you have.

In my view, the FHA and the mortgage deduction are simply subsidies to construction industries and unions, and the freeways simply indirect subsidies to the auto and trucking industries and suburban construction industries.

Photo is a new home in Levittown, Long Island, NY