Some have recently suggested that in the wake of the housing foreclosure crisis, America should become a society whose housing is more centered on rental units than homeownership. A move in that direction would be a mistake.
One of the persistent and unfortunate myths of the housing crisis is that a push to expand homeownership was culpable for the housing crash. This is plainly and demonstrably false. In fact, the vast majority of the bad loans that got us into trouble and led to the foreclosure crisis and the great recession were refinances or loans to people who were already homeowners. Unfortunately, this misplaced blame has given wake to arguments in some quarters that the government should get out of mortgage finance altogether, and that housing industry must now turn to offering rentals for more Americans.
The reality is that homeownership has historically been the number one way for working Americans to pull themselves into the middle class. Homeownership offers an opportunity to build wealth, through equity, that renters simply do not enjoy. It needs to be done right; the loans need to be responsible and sustainable. But make no mistake: Homeownership is an irreplaceable engine of class mobility.
America is a place that holds the promise that if you are willing to work hard, and give your best, that you should be able to have the opportunity to prosper and build a better life for your family. We believe in giving everyone a fair shot. We believe everyone should have a place at the table. But without robust and responsible opportunities for homeownership, the climb for working Americans to enter the middle class gets a lot steeper.
We must not allow homeownership as an idea to be abandoned because of the irresponsible, malfeasant lending that led to the collapse of the housing market. It was primarily industry greed in an under-regulated industry that drove America's economy off of a cliff. Let's not scapegoat homeownership just because we had a period of bad lending.
We need to take a hard look in the mirror in coming years. Do we want America to become a two-tiered society, where working and middle class families are consigned to rent for life, and homeownership is exclusively available to the wealthy? Or do we want to restore and maintain the opportunity for hardworking, responsible Americans to own their own homes and build a better future?
Recent polls and surveys have shown that even in the wake of the devastation from the foreclosure crisis in America, "an overwhelming majority favor homeownership." Americans have every reason to distrust banks and financial institutions after this crisis, but they also have every reason to want to own a home.
Unfortunately, even retiring Representative Barney Frank recently stated in an interview that he has "always been pushing for rental housing," and opined that Americans have a "cultural bias that homeownership is better." The reality is that Americans are right to value homeownership. No other option for working-class families provides an equal or better opportunity to share in our country's economic progress. The equity built up from decades of responsible homeownership has resulted in many businesses being started, many first generation college students going to college, and many families saving a nest egg for their children to build upon. The tax laws reward homeowners, not renters. Renting, while it is an option needed by many, should not be the preferred or only option for those who could otherwise afford homeownership.