Contact us
CALL US NOW 1-888-GOLD-160

Declining Home Ownership Moving to 1950s Rates

  by    0   1

Last week, St. Louis Federal Reserve economist William Emmons presented a study showing American home ownership declining at a rate that’s projected to return levels to the 1950s. In a presentation entitled “Is Home Ownership Still the American Dream?” Emmons explains how the increase in home ownership of post-WWII was fueled by many factors, including New Deal government housing policies, which “laid the foundation for this huge increase in home ownership rates.”

Although the 2008 Housing Crisis was a strong factor, Emmons suggests the downward trend in home ownership began as early as 2005. The Fed economist also suggested the move on balance appeared secular and long-lasting, despite the fact that 90% of Americans younger than 45 have bought or expect to buy a home in the future. Aspirations to own homes are even higher among African-Americans and Hispanics than whites and Asians, yet rates for these groups are 20 – 30% lower.

woman holding tiny house

An overwhelming majority of people still desire to own a home and see it as the primary pathway towards the American Dream, yet fewer and fewer people actually own homes. Emmons said he believes this disconnect has far reaching implications and that at least part of the solution is removing some of the governmental and market incentives for buying homes. Emmons admits easy mortgage acquisition was part of the housing crisis:

“Mortgage terms probably were too easy in terms of setting people up for failure. Some increase in the stringency of those mortgages standards today probably is to the benefit, not just to those individuals, but to the population as a whole.”

graph of home ownership rates

Other contributors to both the rise in housing ownership rates and the subsequent housing bubble were institutions, like Fannie Mae and Freddie Mac, whose mandates were to stimulate home ownership, but whose “safe” policies helped get people into homes they couldn’t afford otherwise. In addition, these institutions helped keep home demand and prices artificially high, which kept the housing bubble inflated.

Along with the recent spike in long-term bonds, mortgage rates are rising again, with the average 30-year mortgage rate rising to 3.73% last week, according to Bloomberg, and some are anticipating rates making it to 4% by the end of the week. Although analysists are looking to Trump’s increased fiscal spending to spur more economic growth, higher borrowing costs could “further hinder first-time purchases at a time when rising values are already hurting affordability and pricing out buyers in many markets.”

Many Americans may still see home ownership as the path to financial security and the American Dream, but reality is few are able to afford it. The answer to affordable housing doesn’t lie in governmental intervention, subsidies or interest rates. It lies in giving the free market more room to determine interest rates and home prices.

Get Peter Schiff’s latest gold market analysis – click here for a free subscription to his exclusive monthly Gold Videocast.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

[Total: 0    Average: 0/5]

Related Posts

War on Cash Hits a Snag in Europe

The war on cash may have hit a snag in Europe. A lot of people apparently don’t want to play along. [Total: 5    Average: 4/5] Related


Gold and Silver Shine in the Midst of Commodity Slump

Banks active in commodities have been hammered so far in 2017. According to reporting in the Financial Times, income from commodity trading and related activities at Goldman Sachs, Citigroup, JPMorgan and nine other investment banks dropped 40% in Q1 2017, and the struggles have continued into the second quarter. Weakness in the energy sector generally, […]


Technology that Glitters in Gold: Solar Energy, Bioprinting and Tractor Beams

Researchers continue to come up with amazing new technologies utilizing gold. We generally think of gold as an investment as well as money, but it is increasingly being used in high-tech applications. Gold’s conductivity and malleability make it suitable for a number of futuristic applications, from energy production to healthcare. Researchers are even using the metal in […]


We’re Selling Life Jackets to the Titanic; Why Wouldn’t You Buy One?

Gold can literally mean the difference between life and death. Now, that may sound like a bit of hyperbole. And in most cases, it would be. But during World War II, a tiny bit of gold became the salvation of a dying soldier. [Total: 12    Average: 4.3/5] Related


Healthcare Plan Collapse Rekindles Doubts About Trump Economic Agenda

The dollar plunged after Republicans in Congress abandoned their plan to overhaul Obamacare this week. The plan to “repeal and replace” the Affordable Care Act collapsed after Senators Mike Lee and Jerry Moran joined fellow Republicans Susan Collins and Rand Paul opposing it. In fact, “repeal and replace” was a misnomer. The Republican plan kept many […]


Comments are closed.


Enjoy this blog? Please spread the word :)

Free Newsletter & Notification of Special Deals
RSS Feed
YouTube Channel
YouTube Channel
Call Now