Is Homeownership – and the American Dream — Still Within Reach?
Home prices across the U.S. aren’t climbing nearly as rapidly as even just a year ago, which would lead one to assume that the goal of homeownership – considered by many to be an essential part of the American Dream — could be within reach for a larger segment of the population. However, as recently highlighted, Hispanics in the U.S. are experiencing one of the lowest levels of growth in home ownership rates during the past 15 years. What could explain this disconnect?
For one thing, getting a mortgage is a challenge for Latinos in particular. According to Hispanic real estate agents, tighter mortgage Credit posed the biggest challenge to Hispanics looking to own a home. Specifically in Orlando, Hispanic homebuyers are less likely to be approved for a mortgage due to low income; across the country, income for Latinos is substantially less per year than other demographic groups.
After tackling the mortgage issue, then there is the affordability issue. Even though housing prices are starting to slow down, income and Wages still aren’t where they should be. Each month, the Bureau of Labor Statistics releases its real average hourly Wages and confirms that Wages are frustratingly stagnant and do not keep up with price increases of basic home goods. This means fewer savings for families, reduced wealth accumulation over time, and ultimately not having enough to purchase a home.
Additionally, transitioning from renting to homeownership might not be as wise of a financial investment as before. According to the real estate analysts at Zillow, upfront costs, moving expenses, and increased maintenance costs are leading to longer “break-even” times when buying a home (the amount of time it takes to make financial sense to own a home versus renting — an issue further exaggerated by lackluster home sales in a struggling economy.
Homeownership is often considered part of the American Dream. For many, it signifies stability and is a symbol of success and permanence within a community. With this in mind, it is troubling that due to poor economic conditions any demographic would find it more difficult than others to obtain something of such significance. It is one thing when individuals analyze the tradeoffs between renting and buying – based on their own preferences – and decide which is the best course of action for them and their families; but it is quite the other if families who want to buy cannot do so because of difficulties in getting a mortgage, reduced savings, and increased consumer costs. It is time that Washington begin to focus on reforms for economic growth – like reducing regulatory burdens on the private sector, maintaining sound spending habits, and truly reforming our Immigration system – that would give a boost to the economy and allow for the recovery to be shared by all who are working hard to achieve their American Dream.