In the age of COVID-19, nothing has become more important than our homes (aside from our health, of course). For many, our homes have been the one constant in a time of much upheaval; where we are working, playing, and receiving comfort.
During this pandemic, homeowners have fared better than renters. They have had the luxury of not needing to move unless they choose to. With historically low interest rates, many homeowners have taken the opportunity to borrow against their property for home improvements, to create a safety net, or just to lower their monthly payment.
The COVID crisis has disproportionately hit renters harder than homeowners in many ways. This is a tragedy. Homeownership can help buffer bad times as it is one of the very best ways to build wealth and security. Paying a mortgage is essentially a forced savings account.
Unfortunately, homeownership is on the decline and it parallels another troubling change — the housing shortage. In 2005, approximately 7 million homes were sold in our country. In 2019, only 5.3 million homes were sold, roughly one quarter fewer. At the same time, the U.S. population grew almost 12 percent, from 295 million to over 330 million people today. In 2005, 1.3 million new homes were sold…in 2019, just 683,000 were sold, just about half.
What is causing this trend? For starters, our country is under-building and not encouraging homeownership. Typically, when housing is built, it is usually a rental community charging high rates. Few people can afford to live in such communities as rent increases have outpaced the rate of inflation for most of the decade. Exacerbating the issue is that big businesses have entered the market and are investing millions of dollars to buy single-family homes as rental properties, increasing prices and limiting opportunities for individuals to become homeowners.
For many years, homeownership was promoted in this country. Today, most people don’t realize that they are better off having a higher mortgage payment that builds equity rather than a rent payment that does not. In the past, this idea was widely shared and promoted.
We are in the midst of many crises today. The housing crisis is one crisis that will not go away with a vaccine or a vote. The ability to pursue the American dream, buying a home to build wealth and stability, is slipping away for so many in our country.
I would like to ask each of you reading this article to think about who you can help become a homeowner. If you own a home, share the benefits and yes, the pains of homeownership with your circle. Explain how one builds equity through homeownership. Work with your loved ones to improve their credit scores and save for a down payment. Most people don’t realize that buyers can put as little as one percent down towards a home.
If you are a renter, get serious about a plan to buy a house. Start the conversation about homeownership early and build a group of trusted advisors to help you get there. We are happy to help you develop a plan, just reach out.
Let’s all work together to advocate for affordable housing for everyone. Let’s promote ways that everyone can obtain the American Dream.