Homeownership

"When I look at how rental prices are going up, I know I don't have to worry, because I have a fixed mortgage payment. That's a big relief," says Edgar Proctor, owner of a two-bedroom home in Washington, DC. Edgar has come a long way and he knows it. In the late 1990s, he bounced around from transitional housing to homelessness. After getting back on his feet, he enrolled in a local asset-building program and began savings towards his dream, owning a home. "It took me longer to save for my down payment than I had hoped, and it was a struggle at times, but now that I've done it I'm so happy." ¹

The United States needs a balanced, comprehensive housing policy that not only offers more opportunities to buy a home but also protects low-income families from discriminatory and predatory lending practices that threaten to take it away.

Homeownership remains the most widely accepted symbol of the American Dream. The American Dream may be only a quaint expression, but the importance of a home in most families' asset portfolio is real. Wealth differences between homeowners and renters are striking. This is true for low-income people as much as anyone else. According to the Federal Reserve's 2004 Survey of Consumer Finances, the average net worth of homeowners with incomes below $16,000 was $73,000, compared to $500 for renters. ²  

This wealth generating capacity of homeownership is particularly important to the financial well being of minorities. Home equity makes up 63 percent of the wealth of African Americans and 61 percent for Hispanics compared to 38.5 percent for whites. ³ In spite of this, there is a gap of 25 percent between the homeownership rates of minority groups and those of whites. ⁴

Homeownership is widely recognized as a social good that promotes healthy families and communities—outcomes that everyone will agree are desirable. But the cost of owning a home remains well out of reach for too many low-income families.

Income growth has not kept pace with the rising cost of homes. Between 1978 and 2003, the average cost of a home rose 30 percent more than the incomes of working families with children. According to a study by the Center for Housing Policy, the rate of homeownership for families with children is actually lower today than it was in 1978.⁵

Endnotes

1. Edgar Proctor (2008), Advice From Success Savers, Capital Area Asset Builders. 
2. Liz Pullman Weston (2006), Why It's Smarter to Buy Than Rent, MSN Money. 
3. Ross Eisenbrey and William Spriggs (2005), Two Steps Back: African Americans and Hispanics Will Lose ground under Social Security "Reform", Economic Policy Institute.  
4. Homeownership Trends (2006) , Joint Center for Housing Studies of Harvard University.
5. Working Families with Children Less Likely to be Homeowners Now than They Were in the 1970s, New Study Details U.S. Homeownership Trends" (2006), Center for Housing Policy.