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4 - The Homeownership Crisis

Published online by Cambridge University Press:  05 July 2014

Mechele Dickerson
Affiliation:
University of Texas, Austin
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Summary

U.S. housing prices soared in the 1990s and early 2000s. This was very good for the United States because a strong housing market has historically been a bellwether for the overall strength of the U.S. economy. House price appreciation was also good for existing homeowners, especially because most household wealth is concentrated in housing. Unfortunately, home appreciation was not good for the financially strapped renters who were struggling to become the homeowners envisioned in the Happy Homeownership Narrative. To ensure that Americans continued to buy homes, the United States intervened yet again in housing finance markets. Like the government’s massive intervention after the Great Depression, changes in the mortgage finance market during the 1990s and early 2000s succeeded in helping cash-strapped renters buy homes. Unlike the post-Depression interventions, however, these recent fixes were short-lived primarily because the government’s attempt to solve the problem of stalled homeownership rates mischaracterized the actual problem Americans faced: far too many people simply cannot afford to be homeowners.

Stalled Homeownership Rates, Soaring Appreciation Rates

As shown in Figure 4.1, even though overall homeownership rates now exceed 60 percent, less than 40 percent of U.S. households owned homes before the turn of the twentieth century. During the first few decades of the twentieth century, homeownership (mostly farm-ownership) rates remained relatively stable. Rates dipped only slightly in the first few years of the twentieth century as the United States shifted from a farming to a nonagrarian economy. Non-farm-ownership rates continued to have modest increases until the 1930s, when rates stalled and then fell because of the Great Depression.

Type
Chapter
Information
Homeownership and America's Financial Underclass
Flawed Premises, Broken Promises, New Prescriptions
, pp. 64 - 84
Publisher: Cambridge University Press
Print publication year: 2014

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References

Nelson, William E. & Williams, Norman R., Suburbanization and Market Failure: An Analysis of Government Policies Promoting Suburban Growth and Ethnic Assimilation, 27 Fordham Urb. L.J.197, 226−31 (1999)Google Scholar
Green, Richard K. & Wachter, Susan M., The American Mortgage in Historical and International Context, 19–4 J. Econ. Persp. (Fall 2005)Google Scholar

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  • The Homeownership Crisis
  • Mechele Dickerson, University of Texas, Austin
  • Book: Homeownership and America's Financial Underclass
  • Online publication: 05 July 2014
  • Chapter DOI: https://doi.org/10.1017/CBO9781139839280.004
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  • The Homeownership Crisis
  • Mechele Dickerson, University of Texas, Austin
  • Book: Homeownership and America's Financial Underclass
  • Online publication: 05 July 2014
  • Chapter DOI: https://doi.org/10.1017/CBO9781139839280.004
Available formats
×

Send book to Google Drive

To send content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about sending content to Google Drive.

  • The Homeownership Crisis
  • Mechele Dickerson, University of Texas, Austin
  • Book: Homeownership and America's Financial Underclass
  • Online publication: 05 July 2014
  • Chapter DOI: https://doi.org/10.1017/CBO9781139839280.004
Available formats
×