Homeownership

The US policy heavily promotes homeownership, pushing 2.5 trillion dollars in US policy budget towards creating homeownership. Even with this budget, the rate of homeownership over the last forty years has hovered around 62%. 1 What does this mean? Why is homeownership so heavily promoted? 

Homeownership is defined as a person who owns a home or an apartment. When the person who owns the house or apartment also lives there they are an owner-occupant. When people think of homeownership they often think of the “American Dream”. 2 The image of the “American Dream” is thought of as a two-story single-family housing in the suburbs with a yard and picket fence. The “American Dream” is all about wealth-building. 3 Where does housing tie into this? 

Studies show that owning a house can increase familial stability and generational wealth. 4 In Questioning Homeownership as a Public Policy Goal, Morris lists that homeownership can help grow familial assets and create financial security, enable people to have greater control over their environment, stabilize neighborhoods and strengthen communities, and generate economic growth and jobs. 5

Homeownership is promoted in hopes to increase financial and communal stability in the United States. However, there are negative effects that homeownership may have on low-income families. 6 Vulnerability and financial stress may arise when acquiring a mortgage. 7 Morris writes that homeownership in low-income families may lead to unwanted consequences such as indivisible assets, effects of location-specific shock, the large transactions associated with home buying and mortgages, housing can be difficult to sell, and because of smaller markets often people are left without jobs when a market closes and less-valuable housing due to location. 8

Homeownership is thought of as the most effective way to build wealth but this may not correlate to opportunity and upward mobility. This often takes generations to establish. While the United States pushes homeownership there are large gaps in the housing market that make it hard for that number to grow. There are very few resources that help low-income buyers and those with low financial literacy. Is homeownership the best way to promote wealth building and familial stability? What type of resources are needed? 

 

  1. Davis, Morris A. “Questioning Homeownership as a Public Policy Goal.” CATO Institute, May 15, 2012, 16.
  2. Santiago, Anna Maria, George C. Galster, Ana H. Santiago-San Roman, Cristina M. Tucker, Angela A. Kaiser, and Rebecca A. Grace. “Foreclosing on the American Dream? The Financial Consequences of Low-Income Homeownership.” Housing Policy Debate 20, no. 4 (September 2010): 707–42. https://doi.org/10.1080/10511482.2010.506194.
  3. Santiago, Anna Maria, George C. Galster, Ana H. Santiago-San Roman, Cristina M. Tucker, Angela A. Kaiser, and Rebecca A. Grace. “Foreclosing on the American Dream? The Financial Consequences of Low-Income Homeownership.” Housing Policy Debate 20, no. 4 (September 2010): 707–42. https://doi.org/10.1080/10511482.2010.506194.
  4. Lijing, Du, Jian Huang, Daniel Singer, and Gokhan Torna. “The Distribution of Unlevered Housing in American Urban Areas.” International Journal of Social Economics 45, no. 5 (May 14, 2018): 765–75. https://doi.org/10.1108/IJSE-09-2016-0258.
  5. Davis, Morris A. “Questioning Homeownership as a Public Policy Goal.” CATO Institute, May 15, 2012, 16.
  6. Lijing, Du, Jian Huang, Daniel Singer, and Gokhan Torna. “The Distribution of Unlevered Housing in American Urban Areas.” International Journal of Social Economics 45, no. 5 (May 14, 2018): 765–75. https://doi.org/10.1108/IJSE-09-2016-0258.
  7. Santiago, Anna Maria, George C. Galster, Ana H. Santiago-San Roman, Cristina M. Tucker, Angela A. Kaiser, and Rebecca A. Grace. “Foreclosing on the American Dream? The Financial Consequences of Low-Income Homeownership.” Housing Policy Debate 20, no. 4 (September 2010): 707–42. https://doi.org/10.1080/10511482.2010.506194.
  8. Davis, Morris A. “Questioning Homeownership as a Public Policy Goal.” CATO Institute, May 15, 2012, 16.

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