The government should scale back the financial support it gives to encourage homeownership, says Yale University economist Robert Shiller.

The issue is quite germane as the government considers what to do with Fannie Mae and Freddie Mac, which increase the supply of money available for mortgages, and the Federal Housing Administration, which directly subsidizes homeownership, Shiller writes in The New York Times.

How the Federal Reserve handles its quantitative easing program also involves the issue of government support for homeownership, he notes. Experts credit the Fed's easing for much of the gain in home sales and prices over the past year.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

"For both political and economic reasons, any or all of these encouragements for homeownership — not to mention the mortgage interest deduction — could be sharply curtailed," Shiller says.

"Our national policy needs to take away much of the enormous subsidy to homeownership — but if and when it does so, it will have to find some other way to promote proper saving."

That caveat is necessary because of evidence that for most American households close to retirement, home equity represents the bulk of their wealth, Shiller explains.

Whatever the wisdom of government subsidies, many experts remain bullish on the housing market, despite the recent rise in interest rates.

"Housing affordability has deteriorated slightly in response to the rise in mortgage interest rates, but remains considerably better than the historical average," Paul Diggle, property economist at Capital Economics, writes in a commentary obtained by Bloomberg.

"With price gains still going strong, there are few signs that the rise in rates will derail the housing recovery."

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video