That’s right. After hitting a 50 year low in the rate of home ownership, we have turned the corner. The rate is starting to rise, changing a trend that has been going for over 10 years.
Financial policies that were put in place by the Clinton and Bush administrations were intended to boost the rate of home ownership. But these policies actually caused the opposite to happen. The intention was to make it easier for people to get mortgages, thus raising the rate of home ownership. And initially it was successful. The home ownership rate soared beginning in the mid 1990s as the policies came into effect. And it continued until the mid 2000s. These policies made it possible for almost anyone to qualify for a mortgage, as long as your had good credit. And the mortgage companies ran with it. It was possible to get a mortgage where you didn’t need to verify your income, the mortgage company would accept whatever you said. Other plans did not even require that you had income. Still others had mortgage rates far below the market rate, which did not require any payment on the principal and added the difference between the market rate and the loan rate to the principal. And when the ten year balloon payment was due, those home owners received a very nasty surprise in the form of monthly payment that rose through the stratosphere.
Combining all of this was a major contributor to the real estate collapse of the mid 2000s. And with it came the crash dive in the rate of home ownership. The rate reached the bottom in early 2016, when it hit a fifty year low. But it seems to have turned the corner, and the rate of home ownership is rising.
But I have never heard anyone from the government or the Federal Reserve admit that their policies caused the real estate crash. And many American were affected by the real estate crash. Have you?
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Bunny and Art Reiman
