Home Ownership Remain Key to Building Wealth

New York Times Editorial Board: “As the rate of home ownership has declined, from a peak of nearly 70 percent in 2004 to a 20-year low of 64.3 percent recently, the number of owner-occupied homes has barely budged, while the number occupied by renters has increased by nearly 25 percent.”

“Even with the substantial decline in wealth after the housing bust, the net worth of homeowners over time has significantly outpaced that of renters, who tend as a group to accumulate little if any wealth.”

“A recent study by researchers at the Joint Center for Housing Studies at Harvard University analyzed the reasons for these differing outcomes. Paramount among them is that home ownership requires potential buyers to save for a down payment, and forces them to continue to save by paying down a portion of the mortgage principal each month.”

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There need to be “conditions under which middle- and lower-income Americans can sustain home ownership and avoid the ruin of foreclosure … Legal and regulatory protections against practices that inflated the housing bubble need to take root.”

“Equally important, larger economic forces that make home ownership less possible for working people need to be in the forefront of political debate.”

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  • CJR

    Mortgage payments and rent payments are virtually equal in many places.
    The difference is that homeowners are paying down a loan on a (hopefully) appreciating asset. Renters are paying as they go on a service.
    Yes, homeowners increase their wealth for this reason, but the other reason homeowners increase their wealth is they MAKE ENOUGH to save for a down payment. For everyone who doesn’t have a large enough disposable income, the hurdle of a down payment basically prices them out of wealth accumulation.
    Part is behavioral.
    But a bigger part of it is wages.

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