Homeownership Of The United States

Americans across the United States search for the perfect home, location and square footage of course a great price to pay for their castle. Finding an affordable place to live is ideal, and necessary for survival in this day of age. As the years go by the cost of living increases but Americans do not receive a cost of living raise. The demand for affordable housing is on a all time high, but so is the cost of housing in the metropolitan areas across the United States. America must take care of its citizens and should provide affordable housing programs, to assist Americans to either purchase or rent a home.

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.

As we now know, the U.S. economy, the middle class, and its job growth was damaged by the overwhelming collapse of Wall Street, which was triggered by the downfall of the housing market and sub-prime loan defaults. One of the main things that need to be addressed in our economy today is the housing market and making sure that our banks and credit unions are not allowing people who do not have the necessary income to pay their mortgage disbursements. In an article entitled Thinking outside the Housing Bubble, the author John Vogel remarks how the economy is generally supported by the housing market. Vogel states:

Housing in America really isn’t what it used to be. With prices getting very high, people have found themselves moving and relocating more quickly. Statistics have shown that 35% of Americans have moved at least once in the last 5 years (meaning that in the last 60 months, over 100 thousand people had to fill the change of address forms) and the truth is that the number doesn’t seem to be reducing. Moving in America has always been on the rise as people have been on the constant search for more opportunities and greener pastures; better jobs, better housing and living conditions, improved ways of life, etc. Job related factors have always been the most frequent and common reasons

The desire for home ownership is something embedded in our DNA. Claiming property and owning a house is a critical part of the “American Dream.” Home ownership represents more than just a place to rest your head at night. Your home is the environment that serves as a setting for your journey through life. It’s the place of your children’s first steps, family birthdays, barbeques, amongst many other significant events. Your home is the backdrop that describes you and your family. Although many American’s were financially hurt by the trillions lost in the home equity market during the housing bubble, there is and will always be a desire to own a home. The most vital part is that American’s who lost their homes during the crash, learn from their past, so that they do not repeat a foreclosure.

In his essay “The Mansion: A Subprime Parable,” Michael Lewis uncovers the reality about the American real estate issue. A great number of Americans have obtained homes that they cannot afford. Banks have loaned out home loans that individuals cannot pay back. Some days it seems as if half of the nation is financially submerged. It is no doubt that certain home loan specialists, and numerous huge firms can be blamed for this crisis, yet they cannot be blamed for everything. Most of the blame, Lewis argues, has to be given to us, the citizens. The fact of the matter is that Americans are greedy, we desire luxurious things that we can show off to everyone around us to prove how well we are doing. This is true especially when it comes to housing. Numerous have been brainwashed into accepting that if a major house implies achievement, then the

By the 1970s, HCTI ratios increased to over 5:1 (U.S Census). Figure I denotes the housing appreciation trend in light blue has accelerated at a higher rate of speed during the past 40 years (Shiller, [2005]). Over the past 40 years housing values on average have doubled at the end of a housing boom, out pacing increases in median income by 50% (see Figure II, U.S Census, [1969-2008]). This has led to the median housing expense to being

The housing crisis in the late 2000’s was created in part from subprime loans that lenders gave to individuals that did not have to provide proof of income that they could afford the house. This was a disaster likely to repeat itself. If a person is hoping to buy a home, they will buy whatever the lender allows them to purchase even though it could be a financial stretch. Lenders, builders, sellers, appraisers, buyers, owners, and governmental policy makers are all still gambling with the economic future of both their buyers and the American economy as a whole.

More middle class and minority families than ever are now underwater in their mortgages, and have zero to negative wealth after the Great Recession that followed the 2000 housing boom (Potts 7). Even those who kept their homes saw their values drop due to the declined neighborhood worth. My childhood home’s peak value was over $200,000, but my parents listed it on the market with the hope of selling for just $175,000 when they wanted to move to lower their mortgage. There were never any foreclosures in our neighborhood, the house is in one of the best school systems in the state, and it had a great location, yet the value dropped more significantly than it had in twenty years. This was a situation many homeowners didn’t know was possible

Record high unemployment, declining home values, and a recessionary climate have plunged the housing industry into a downward spiral. It started with lenient mortgage guidelines that allowed millions of people to achieve the American Dream of owning their own home. Eventually they ended up living beyond their means. Adjustable rate mortgages came due and realizing that they could not afford the jump in mortgage payment, homeowners began to put their homes up for sale. There weren’t enough buyers to keep up with the supply, and mortgages began to go into default. Families across America were faced with the reality that they could no longer afford to keep their homes, and foreclosures began to flood the market, leading the nation into a

Our research has revealed in 1940 the U.S. Census Bureau recorded the median price of a single family home in the U.S. was approximately $2,938. The median yearly income was $1,730. The Housing Cost to Income ratio (HCTI) was just over 2:1. Most borrowers during this period kept their mortgages for 30-years. During the 1970s borrowers began to exhibit major behavioral changes by ceasing to keep their mortgages until full term (the average being 10 years) while their HCTI ratios ballooned to over 5:1.

The 21st century brought changes to many American households. Many people had to completely readjust their standard of living. There were several winners and losers in the recession. Some people were able to purchase homes at low prices. However, things were not as great when the homeowner was ready to sell the home. Homeowners are still overvaluing their homes, but the gap between home prices and appraisals is shrinking.

The American Dream is always becoming bigger and bigger. Since the end of World War II the United States has been obsessed with suburbia and America’s people have been building and borrowing ever more. The early years of this decade may have paved the way for every family to get a piece of the American Dream, but as we can all see, in the past couple of years, the financing options that enabled just about everyone to own a home were not options that were good for those consumers or the United States’ economy. Federal Regulation and more education are the only way to be politically correct while preventing people from buying more home than they can afford and educate them so they may make the smart choice in purchasing a home.

Around 2006 the price of houses began to fall substantially fast. “The oversupply of houses and lack of buyers pushed the house prices down until they really plunged in the late 2006 and early 2007” (The Subprime Mortgage Crisis Explained). These actions threw investors into a big dilemma. In the beginning they believed buying the mortgages would bring them a profit, but quickly realized that the mortgages would cost them more financial damage than reselling the homes. “Nationwide, home vales have declined about 16% since the summer of 2006 and experts project that the drop will continue until homes have lost about 25% of their value” (Biroonak, 2008). In other words mortgage homes are “underwater”, that is, the mortgage owed equals or exceeds the value of the house (Biroonak, 2008). Investors and homeowners started to go more in debt trying to pay off their original debts.