We have made the pursuit of homeownership a national pastime. Scores of cheerleaders - politicians, activists, builders, bankers - celebrate every incremental boost in the national homeownership rate (now 67.7 percent) as one more yard gained toward the goal line of homeownership for all. In just the past five years, the nation has added more than 8 million to the
ranks of homeowners.

The homeownership cheerleaders rarely consider the public policy implications of their vigorous pursuit of homeownership goals. Neither do the millions of families scrimping toward down payments on their castles. They don't question that buying a home is good. They assume it is the path to financial security and family and neighborhood stability. Yet the arguments for this American dream deserves scrutiny:

Homeownership as capital investment for the nation.

The home mortgage deduction bolsters homeownership. Yet it also skews capital investment toward home building and away from more profitable sectors like plants and equipment.

Homeownership as a personal asset-building strategy.

Supposedly homeownership protects families from inflation. Yet in some neighborhoods housing prices have lagged behind inflation. From 1980 to 1999, the returns from stocks, bonds, and mortgage-backed securities outstripped the capital appreciation of housing.

Homeownership as social capital.

Supposedly homeownership solidifies communities because homeowners care more about the quality of their neighborhoods, and this is because it is more costly for them to move. Yet this may be tautological: Families who are stable, who care about schools, safety, and public amenities, and who do not plan to move soon buy homes.

Homeownership as a means to narrow disparities.

While homeownership rates have increased across race and ethnic lines, the gap between minority and white homeowners has shrunk by only 1 percent since 1994. Persistent gaps have multiple causes. Since much larger proportions of minorities have low incomes and since the most affordable homes are often in neighborhoods with high crime and poor schools, tenants may not want to cement themselves to troubled communities.

Indeed, like their white counterparts, they are fleeing central cities to buy homes in suburbs - but often in minority suburban neighborhoods.

Homeownership does remain a realistic hedge against inflation.

Yes, the stock market outperformed housing appreciation since 1980. Yes, housing prices lagged behind inflation in some neighborhoods, but in many neighborhoods, housing prices increased considerably faster than inflation. And those who purchased starter homes suffered fewer losses than those buying higher-priced homes. Yes, investors with diversified portfolios did better than investors who concentrated all their wealth in their homes.

But typical lower-income families are not choosing between buying a home and investing in mutual funds. For them, homeownership is enforced savings of the best kind - they get to live in their investment.

As for social capital, it is difficult to distinguish the chicken from the egg:

Does homeownership make for more stable families or do more stable families buy homes? Are participatory movements, like PTA attendance, related more to family stability than homeownership per se? Yet, holding income and family status constant, children who lived in owner-occupied homes did better in school than those in rental homes.

Finally, the racial divide in homeownership mirrors the larger racial divide in the United States - homeownership may not transcend it, but the past decade shows that minorities can narrow the gap - albeit slowly. Minority tenants want to buy homes as much as white counterparts. Ongoing efforts to reach out to them may yet pay rich dividends.

During the 1990s, loans with low down payments helped minorities overcome wealth and income constraints. In the coming decade, home buyer counseling and innovative underwriting will likely further narrow the homeownership divides.

In short, the treasured national pastime keyed to the percentage of homeowners should continue. It is a risk, but for most it will prove a risk worth taking. The mortgage interest deduction certainly has encouraged homeownership, but 90 percent of this $61 billion benefit has subsidized households with incomes over $40,000. Lower-income tenants rarely benefit because the standard deduction usually exceeds the value of their itemized deductions even with mortgage interest and property taxes.

Unlike the 1980s, homeownership among low-income Americans has surged amid what is likely to be at or near a peak in home prices. More homeowners will be vulnerable to a downturn not only because they will have bought closer to its arrival but also because more will face it with paper-thin equity cushions and cash reserves.

At this time it is especially important to remind home buyers of the risks of homeownership and help them plan ahead to manage them.