Questions continue to come up about home ownership in America, as well as the current state of banking. The collapse of financial services and the mortgage industry not too long ago was mainly due to unconscionable deregulation in the financial sector, and lawlessness for the benefit of very few. This gave rise and further life to questionable and unethical sub-prime mortgage lending programs designed to rip millions of misinformed and vulnerable people from their hard earned income. Most of these mortgages eventually ended up in banks and financial institutions’ portfolios while trading hands in various forms of shady transactions.
Take a look at the spike during president J.W Bush's era in the image above. This period will certainly serve as one of the darkest eras in home ownership as millions lost their homes and hard earned assets while the real culprits happily walked to their banks with smiles on their faces. Not many of the responsible and guilty were ever put to trial or investigated.
Frankly, for many the term Homeownership merely served as a delusional and emotional terminology while “homeowners” hardly owned a significant piece of that asset. It wasn’t really about homeownership, but rather renter-ship. People were paying higher prices than the average rent rate at the time.
The U.S. homeownership rate has recently fallen to a the lowest rate since 1965 as rising prices put buying out of reach for many renters. The drop is actually an extension of year-long declines from the last housing boom because of tight credit and a shift toward renting in the aftermath of the crash. First-time buyers have been struggling to find affordable properties as low mortgage rates and an improving job market spur competition for a tight supply of listings.
Now, banking in general is in a much stronger/healthier position than a few years ago, thanks to an enormous influx of regulations and the hard work of Barack Obama.
The biggest challenge is affordability and unfortunately home prices are rising so much faster than real incomes. This makes it really hard for buyers to save for a down payment.
On the other hand, more people opt to lend rather than own while remaining fearful about potential home value declines and another possible foreclosure crisis.
The homeownership rate for Americans ages 18-34 fell to 34. 1 percent in the second quarter from 34.8 percent a year earlier, the Census Bureau said.
My advice is to not simply fall into a delusional homeownership trap, but rather plan properly to truly own your future home within a few years, be aware of the long term cost of investment and never carry a mortgage on your property for too long, especially past your retirement age.