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A cloudy crystal ball: The face and certainty of homeownership is changing

Although the economy is gaining strength, unemployment is down, and the dream of homeownership is still alive – the future is unclear.

millennials student loans

During an October 2015 speech presented at the Mortgage Bankers Association Expo in San Diego, California, Julián Castro, Secretary of the U.S. Department of Housing and Urban Development (HUD), recently described purchasing and owning a home as “the magic of homeownership.”

Let’s get real here. There is no “magic” involved in owning a home: your bank or lending institution approves you for a mortgage based on your credit rating, your earned income and your ability to pay back the mortgage.

The problem is that despite the average millennial earning a decent salary (and often doing so fresh out of college) they have also accrued college debt that often exceeds the price of a home. Forget about owning a home. It’s almost as much of a challenge finding an apartment to rent.


Who’s buying and who’s trying

Despite Secretary Castro telling a recent Mortgage Bankers Association meeting that “We’re prospering and the economy is growing stronger,” some facts are in order. Homeownership is down nearly 8% from only 10 years ago. But what is interesting is that during those ensuing years a few statistics have remained constant.

According to a recent US Census Bureau Housing Vacancy Survey, the individuals owning a home in 2005 as compared to 2015 are still in the 55-65 year-old age bracket which represent between 75 – 85% of the U.S. home-buying population.

You can work backwards from there: survey results show that 45-54 year-olds make up 69%, 35-44 year olds make up 58% of homeowners and everyone 34 years of age and younger make up only 34% of those financially stable enough to own a home.

Show me the money

Other data gleaned from the survey reveals that non-Hispanic whites continue to lead other nationalities in terms of owning a home averaging about 72% over the last 20 years. Hispanics and blacks have remained about the same averaging about 44% and 45% respectively.

Other nationalities including Asians average about 55%. That these statistics have remained consistent for the last 20 years speaks strongly of who’s earning what and how much.

Not all doom and gloom

To his credit, Secretary Castro’s speech wasn’t all doom and gloom. Within the context of President Obahma’s administration, the economy has improved (“67 straight months of private sector growth. More than 13 million new jobs. An unemployment rate cut in half”).

But Castro’s remarks underscore that despite any perceived prosperity, banks are not bending over backwards to approve loans for first-time homeowners.

Commented the Secretary, “…It’s still too hard for creditworthy borrowers to get a loan. And groups who should be leading the home buying market of the future, millennials and communities of color, are among those being left out.”

Castro said further that [this] tight market doesn’t just impact potential borrowers who’ve been relegated to the sidelines. It impacts the bottom line of every bank because of the missed opportunities for business. And it [negatively] impacts the growth of the housing market as a whole.

Owning a house may be the American dream with the U.S. homeownership rate dipping to a nearly 50-year low (63.4 percent) in the second quarter of this year the American dream remains just that for many adults: a dream.


Written By

Nearly three decades living and working all over the world as a radio and television broadcast journalist in the United States Air Force, Staff Writer, Gary Picariello is now retired from the military and is focused on his writing career.


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