A Washington Post article today proclaims that the relentless promotion of homeownership as the embodiment of the American dream has outlived its usefulness. A position based on the huge losses from the mortgage twins, Fannie and Freddie. Yet the article also reveals that the low-income sector actually only got 25% of the tax relief from deductions for mortgage interest and property taxes. Could it be that Fannie & Freddie was too influenced by higher income lobbiests and veered a bit too far off the originally intended path?
Home ownership is virtually universal among the middle class. In fact, it could be argued that home ownership is the vehicle needed to reach the middle class. According to America Saves, home equity represents more than four-fifths of the typical family's wealth. Home equity helps build credit ratings and provide the basis for loans which can finance start-up businesses. Because mortgage payments are directly tied to the roof overhead, they also represent a form of savings which is forfeited only in the most dire of circumstances. Homeowners are also more likely to make property improvements, which contributes to neighborhood stability.
But not every home adds to short-term wealth. Unfortunately, many of homes available at entry level prices are also poorly built and become a bottomless pit for cost repair projects. If Fannie and Freddie really wanted to do some social good, they would link low-income mortgages to a level of standard of quality. Preferably this would be an energy efficiency standard, to provide a level of stability for future utility costs.
Community Resource Group, a multi-state rural development organization who has stepped in to provide lending for improvements and durable quality new home construction. Several of their projects are converting the colonias along the South Texas border to solid, affordable housing. They chose to use ICFs for the wall construction to provide protection from the heat, and to offer the security of long-term equity. It also puts the full bearing load on the exterior walls, offering complete adaptability of interior spaces for future uses. The houses draw from vernacular architecture which calls for covered patios, and locally crafted kitchen cabinets. A win, win situation.
Owning a “home” may still be a valid American dream. It just may take on a different shape, a different approach, and some re-evaluation of the part of our Uncle Sam.