Magazine article Partners in Community and Economic Development

Achieving the American Dream-Are We There Yet?

Magazine article Partners in Community and Economic Development

Achieving the American Dream-Are We There Yet?

Article excerpt

For as long as I can remember, purchasing a home has been celebrated as a pivotal point in one's life, as a sign of prosperity and personal success. One of our goals as a society has been to make it possible for more people to achieve the American dream of homeownership. And while we've been successful in bringing the percentage of homeowners to new heights, the causes for this shift are difficult to pinpoint.

According to the U.S. Census, the national homeownership rate was approximately 63 percent in 1965 and remained fairly stable for the next thirty years. However, in the mid-90s a housing boom raised the percentage of those owning homes higher each year until it topped out at close to 70 percent in 2005. More than 12 million joined the roster of new homeowners in just over a decade.

Exactly what has caused this rapid increase? The answer varies, depending upon whom you ask. Some studies indicate that lower interest rates allowed more people to enter the housing market. From the late 1980s through the early 1990s, interest for fixed-rate mortgages hovered around 10 percent. By the mid-1990s, rates began dropping rapidly, bottoming out at just over 5 percent for a fixed 30-year mortgage in 2002.

Other studies indicate that the aging of the population has been a strong factor in higher levels of homeownership. According to a study from the San Francisco Fed, a greater percentage of Baby Boomers compared to past generations have entered the housing market. The study additionally shows a direct correlation between longer life spans and higher homeownership rates. …

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