When I became a Realtor more than 40 years ago, I had a single goal: to help families realize the American dream. Today my goal is still the same because I’ve discovered a simple truth – homeownership is good. It’s good for families, communities and the economy.
This simple truth used to be known and understood by those in Washington, D.C. They supported homeownership through tax incentives, such as the mortgage interest deduction and programs that ensured affordable mortgages.
Somewhere, somehow over the last six years, too many decision-makers have come to believe homeownership isn’t important. Their inability to create a clear path forward in the mortgage finance arena has led to uncertainty and restricted credit for qualified homebuyers. This has hurt not only families, but the nation as a whole.
Homeownership helps families build wealth and move up the socioeconomic ladder. This is perhaps more important now than at any time that I’ve been in the real estate business. The economic divide between wealthy households and low- and moderate-income households who can’t afford a home is wider than ever before.
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In California, where home prices are high, this has resulted in a historic decline in first-time homebuyers from a high of 51 percent in 1993 to 31 percent this year, even while interest rates are at historic lows. Even worse, homeownership rates for Hispanic and African American families have seen an alarming decline in the last several years, from 47 percent in 2005 to 42 percent in 2013 for Hispanics and 40 percent to 33 percent for African Americans.
How did this seismic shift in attitude toward homeownership happen? When the housing crisis began, many “experts” almost immediately began deflecting blame from under-regulated lending, which resulted in nongovernment predatory loans, and decided it was homeownership and the policies promoting it that were bad. Lawmakers accepted that somehow owning a home and all the measurable benefits that society had reaped over the previous 70 years following the Great Depression didn’t exist. A large chorus inside the Beltway began saying government shouldn’t support and promote homeownership.
I am writing to say: “Enough!”
Washington needs to support and put forward more leaders such as U.S. Housing and Urban Development Secretary Julián Castro and Federal Housing Finance Agency Director Mel Watt, who believe homeownership is important and are willing to take meaningful action to promote it. They, along with the president, have recently taken significant steps in support of affordable homeownership, such as lowering FHA mortgage insurance premiums, creating a 3 percent down payment loan program, maintaining Fannie Mae and Freddie Mac loan limits, and refocusing Fannie Mae and Freddie Mac on their missions of promoting homeownership.
No one is calling for loans to be made to unqualified homebuyers, and, sadly, not everyone should or will own a home. But the actions that Castro and Watt have taken to promote homeownership, and perhaps even bring finality to the conservatorship of Fannie Mae and Freddie Mac, are exactly what the market needs.
There is no “silver bullet” to make housing affordable, fix the slow housing recovery and promote wealth building. This will require the government and the real estate industry to do their part, but the place to start is to go back to the primary focus of implementing laws and regulations that support and promote putting qualified homebuyers into housing.
Chris Kutzkey of Yreka is president of the California Association of Realtors.