Data released this month by the Census Bureau show that homeownership is increasingly unavailable to Americans, years after the Great Recession.
The rate of homeowners in the US fell in 2016 to 63.4 percent from 63.7 percent, marking the lowest it has been since 1967.
Prospective buyers, meanwhile, got no relief from the market last year, with the vacancy rate down and the median asking price up at to $167,700–the highest it has been since the post-2008 housing price recovery began in 2011.
Though the social and political benefits of encouraging homeownership are debated–particularly in a country hostile to regulatory oversight–the economic benefits of homeownership itself are slightly more clear. Mortgage payments have served as a basic investment vehicle for homeowners, while the long-term benefit of monthly rental payments is accrued solely by landlords.
According to the Congressional Research Service, about three-quarters of total household wealth “has typically” derived from home equity.
This historical pattern meant that the Great Recession wiped out an entire generation of assets along the lower half of the income distribution. While aggregate household wealth declined by 26 percent between 2007-2009, as CRS said in 2013, median household real net worth fell by 39 percent.
“Overall, it is estimated that the bottom 80 percent of households lost two decades’ worth of wealth,” the legislative research service noted.
Though this may have contributed to feelings of alienation that gave rise to President Trump’s once improbable election win, Trump himself doesn’t seem concerned with making homeownership accessible to more Americans.
Less than two hours after being sworn into office, he reversed a move by the Obama administration to cut insurance rates on federally-backed mortgages. The reduction would have seen those with $200,000-mortgages save $500 next year, according to Bloomberg.
Sen. Elizabeth Warren (D-Mass.) reacted to the order by saying it would cost 40,000 families “a shot at a new home.”
The new administration is also keen on reforming Fannie Mae and Freddie Mac, while some Congressional Republicans want to shutdown the wholesale mortgage financiers. Conservatives blame the government sponsored enterprises for last decade’s subprime meltdown.
