Most Americans want to own their own home. Some even call it a biological urge, based on our human desire to nest. Whatever the current economic condition of the country, whatever the latest programs offered or atrocities committed by government and banking institutions, that desire doesn’t seem to change and is unlikely to change even 25 years from now.
Perhaps Thomas Jefferson put it best, “A right to property is founded in our natural wants.”
Even after a devastating housing and mortgage crash that resulted in millions of foreclosed homes and trillions of dollars of home equity lost, the majority of Americans have not given up the idea that ownership is representative of their economic dream.
“Americans continue to want to be homeowners and they want to do it in a more careful and responsible way given the crisis that we’ve been through, but there is no evidence that we’re going to abandon the home ownership society,” Housing and Urban Development Secretary Shaun Donovan said in an interview.
Seventy percent of respondents to a monthly Fannie Mae survey in January said they would buy if they were going to move, an all-time survey high.
“The aspiration to own a home is unchanged,” said Doug Duncan, Fannie Mae’s chief economist. “Changing the rules of funding makes it harder or easier, and that’s a little bit of what’s going on today, but the aspiration is unchanged. That has been consistent across the crisis.”
Prior to the housing boom, presidents from Ronald Reagan to Bill Clinton to George W. Bush touted the “home ownership society.” They have been accused of pushing mortgage giants Fannie Mae and Freddie Mac as well as the FHA, the government mortgage insurer, to loosen their underwriting standards. The result of that push, critics say, was the over-leveraging of the American public.
Today, underwriting is tighter than during the housing boom. Some claim the pendulum has swung too far the other way, keeping potential buyers out of home ownership. The mantra has in fact changed politically.
“A home is supposed to be our ultimate evidence that in America, hard work pays off, and responsibility is rewarded,” President Barack Obama said in an August speech in Phoenix. He stopped short, however, of calling for a home ownership society, and in fact warned against a return to the past. “In the runup to the crisis, banks and the government too often made everyone feel like they had to own a home, even if they weren’t ready. That’s a mistake we shouldn’t repeat.”
Home ownership rose to a high of just over 69 percent during the housing boom after averaging around 65 percent for much of the previous decade, according to the U.S. Census. It has been falling steadily since, now down to 65.2 percent.
As housing recovers and we look to the future of home ownership, the biggest question for the next 25 years is not do we want to own a home, but how in fact will we own a home?
“The most interesting question right now is will we build a housing finance system that supports that home ownership society or not?” asked HUD’s Donovan.
There is now one leading bill in Congress that would dismantle mortgage giants Fannie Mae and Freddie Mac, which have been under government conservatorship since September 2008. It would leave a limited government backstop, much like the FDIC, but put the mortgage business largely into the hands of private investors, which is where it was during the housing boom.
Private investors have been extremely leery of dipping back into the mortgage business, and have only done so in limited, highly rated offerings.
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed
“Fewer properties for sale with such remarkably low interest rates make it a great time to sell but a more difficult time to buy”