Homeownership In The United States

The housing crisis of the late 2000s rocked the economy and changed the landscape of the real estate business for years to come. Decades of people purchasing houses unfordable houses and properties with lenient loans policies led to a collective housing bubble. When the banking system faltered and the economy wilted, interest rates were raised, mortgages increased, and people lost their jobs amidst the chaos. This all culminated in tens of thousands of American losing their houses to foreclosures and short sales, as they could no longer afford the mortgage payments on their homes. The United States entered a recession and homeownership no longer appeared to be a feasible goal as many questioned whether the country could continue to support a middle-class. Former home owners became renters and in some cases homeless as the American Dream was delayed with no foreseeable return. While the future of the economy looked bleak, conditions gradually improved. American citizens regained their jobs, the United States government bailed out the banking industry, and regulations were put in place to deter such events as the mortgage crash from ever taking place again. The path to homeowner ship has been forever altered, as loans in general are now more difficult to acquire and can be accompanied by a substantial down payment.

In previous years homeownership is was what people in the United States showed pride in, up until recent years after the fall in the market economy. The current homeownership in the United States have declined significantly since the years have passed and is now the lowest it has been in decades. Even though the housing market has been improving over the years in the United States, and the increasing homeownership rate is a worthwhile policy goal for America, home ownership still continue to decline.

The American dream is all about stability. Owning a home, having a well-paying job, a yearly vacation and children are stages of the American dream. Above all of them, owning a house is the most important because that means one is secure and stable. My auntie, Evelyn, had reached the biggest stage of the American dream: owning a house. After hearing the good news my family and I planned to visit her and see the new house, but it was too late before we got see her new house: the value of her house dramatically decrease and my auntie was forsaken. So, she decided to let the bank take her house instead of making the house payments. Just like my auntie, Evelyn, many American families were affected by the financial crisis in 2007-2008. Although the financial crisis was a horrific experience, there are some positive aspects.

Ruetschlin stated, “Homeownership is the central vehicle Americans use to store wealth, so homeownership and access to homeownership are at the heat of that widening wealth gap”. The median house worth for blacks and Latinos is $48-$50,000; while the median house worth for whites is a whopping $85,800. Much of this disparity derives from the increasing gap in housing values located in neighborhoods where people of color live versus white neighborhoods. The roots of this issue go back to the National Housing Act of 1934, which marked entire black neighborhoods as bad credit risks. Being so, the act discouraged lending in these areas, even as black homebuyers continued to be excluded from white neighborhoods. (forbes.com) Although it was outlawed over thirty years later, its impact is still felt today as the continuation of residential segregation patterns persists. For example, just three years ago, Wells Fargo admitted to leering those of color into subprime mortgages all the while offering whites with similar credit profiles prime

Statistically, one out of seven families live in severe physical deficient housing. In fact, the housing and stock market revealed in July of 2009 that the Great Recession further widened the gap and income disparity between the average, hard-working Americans and the top 1% of wealthy Americans. Edward N. Wolff suggests that the average American produced a massive 36.1% drop in overall marketable assets while the top 1% of wealthy Americans only lost 11.1%. This income gap disparity ensures that ever-increasing need for affordable housing as the economic crisis worsens.

In these days of economic upheaval, rising unemployment, increasing bankruptcies, and car and credit card loan defaults, perhaps nothing is more frightening than the rising rates of home foreclosures. Owning a home has long been considered the cornerstone of the Great American Dream, and now for many that dream has turned into a nightmare, from which there seems no escape. The combination of predatory lending practices and consumers who have for to long lived beyond their means has created an escalating problem. Unfortunately, there are no easy answers.

FDR’s affordable housing initiative was responsible for the rapid expansion of home ownership throughout the United States (Allen and Barth, 2012). This was accomplished in part through the creation of The Federal National Mortgage Association, which provided affordable low down payment mortgages extended over a 30-year period of time. Over the past several decades the United States economic policy has been to encourage home ownership (Bluhm, Overbeck and Wagner, 2010).

One of the notable issues with the U.S housing market is the extent to which the Government failed to stimulate home ownership rates in the long run. Historical trends in the U.S home ownership rates show stagnant growth in home ownership after the early 1960’s. The Federal Reserve Bank of St. Louis Review indicated that homeownership rates remained relatively constant from 1965 to 1995, despite a wide variety of government policies aimed at stimulating home ownership (Federal Reserve Bank of St. Louis Review 2006). Following 1995, the U.S home ownership rates indicated significant improvements. According to the U.S Statistical Abstract, aggregate home ownership during the period 1995 to 2005 indicated a record high for the U.S housing market (Chambers, Garriga, & Schlagenhauf 2008). Matthew Chambers, a professor for Towson University,

Many families lost their homes to foreclosure during the recent economic downturn in the US economy. These former homeowners became renters as the national home ownership rate dropped. Many families felt that home ownership would remain out of their reach due to previous foreclosure history. In addition, losing your home and transitioning to renting is tough on your psyche. However, as rental rates continue to increase and the economy recovers these same families now see possibilities of home ownership again. The housing market has characterized the buyers as “Boomerang Buyers”.Approximately 5 million people lost their homes to foreclosure or short sale and become potential boomerang buyers. Quietly, by buying homes again, these buyers

Homeownership in the U.S. hit 63.4 percent in the second quarter of 2015, the lowest rate since 1967. This has many people worried and multiple industries pitching theories, hoping to make sense of the decline. Does the blame lie with the stringent requirements following the housing market crash? Are people still weary of the financial responsibility in a still uncertain American economy? Or are some critics right, is homeownership culture changing, are Americans giving up on the America Dream?

In 2001, the United States endured a short unexpected decline in the economy. With the terrorist attack at 9/11 and accounting scandals, a decline in the U.S economy was an obsession in the minds of the American people. However, in order to keep things at peace, the Federal Reserve determined that they will lower the Federal funds 11 times. The rate was then lowered from 6.5% to 1.75% in a matter of one year. This allowed bankers the power to award more borrowers with loans even if they had no job, income, or even assets. Even with no way of obtaining any income the dream of buying a home became a reality. It wasn’t long before everything became way cheaper.

We, more than any other age, want stability. No one wants to see that in us because it’s a tough fight to get it, but we want to self-manage and have financial certainty. Houses mean something entirely different to us than to others. We don’t see houses as necessities or obligations. We don’t take mortgages lightly or settle into some place we’re not happy with. The real estate market has some new customers who are taking their choices seriously. To us, that house has to be earned, and it’s also an investment. We don’t feel an obligation to settle into that house; we want it because of what it offers us. That house can grant both stability and financial security. Making an investment like that is something that overjoys a generation still shaken from the uncertainty of the market crash. When we make investments, we become adults. There is nothing scarier or more exhilarating than stepping away from an age where we can’t control the world around us into being at the wheel. The housing market may not have the same customers as it once did, but these customers are ones who aren’t taking any decisions lightly. Stepping from dorm to apartment to renting and, finally, to owning a home is a terrifying journey. Nobody should take it lightly, but we should take it. We’re ready to take on mortgages and handle the economy in a new

Home prices are increasing, but personal incomes are not keeping pace (Myers, Painter, Zissimopoulos, Lee, & Thunell, 2017). Faltering incomes and a shabby labor market that produces only low-paying jobs are key culprits to home ownership for the young (Myers & Simmons, 2017). Surveys among renters show that 65-72% would own rather than rent, if they were financially able (Fry & Brown, 2016). The problem is more extreme for the poor. Prior to 2008,

Homeownership has long been a highly valued feature of a strong and wealthy economy and policy-makers in the United States receive a lot of support in developing policies that promote homeownership. The U.S. tax structure and many federally sponsored state and local programs provide benefits to homeownership and seek to increase ownership among disadvantaged groups, respectively. One feature of the federal tax code is mortgage interest deductions. Mortgage interest deductions are a costly but very popular tax deduction that is argued to have contributed to the housing bubble. From 1913, when income tax was introduced, to 1986, when Congress passed the Tax Relief Act of 1986, tax payers deducted all personal interest (Morrow,2012). The Tax Relief act phased this out with the exception of mortgage interest because Congress wanted to promote homeownership. The deduction does not have to be used on someone’s primary home and can be used on up to two homes. The mortgage must be secured by a home and the mortgage must be recorded. For interest to be deductible it must be either grandfathered-in mortgage debt (incurred before October 1987), debt incurred to either buy, build, or improve a home- up to $1 million, or other debt secured by a home up that can be used for any purpose- up to $100,000. The amount of the deduction is the amount of mortgage interest paid in that year multiplied by the taxpayer’s marginal tax rate (Morrow,2012). But the deduction is only useful for people

For generations homeownership has been viewed as one of the cornerstones of the American dream. Nevertheless this American dream has almost exclusively been available to white Americans. However, over the past 25 years this dream has become a reality for more and more Americans as the rise of the subprime mortgage market has allowed the majority of Americans to become homeowners. In 2005, at the peak of the housing bubble, 69.2% of Americans seemed to have achieved the American dream of owning their homes. Three years later, the housing bubble popped and the American economy entered the most severe economic downturn since the Great Depression. The downturn was largely caused by the implosion of the subprime mortgage market whose growth was driven, in part, by the belief that homeownership is a right that all Americans are entitled to as part of the American dream. The perpetuation of this belief is dangerous to the United States economy because homeownership has for so long been unobtainable for the majority of non-white Americans, as one of the only paths to this American dream for many minorities is through high-risk home loans that threaten the stability of the economy.