Tag Archives: homeownership

Some programs offering housing assistance to residents with higher incomes

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As housing prices have gone up in recent years in much of the United States, some assistance programs now offer monetary help to people with higher incomes:

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Down Payment Resource, a company that compiles information on more than 2,700 home-buying programs, shared data with The Washington Post that showed more than 115 programs have raised their income threshold requirements since 2023. In most of those cases, the programs now offer aid to would-be home buyers whose income is above their local median, sometimes well above.

Memphis, for instance, now offers down-payment assistance to households with twice the local median income that purchase in designated areas of the city. San Francisco offers loans of up to half a million dollars for first-time home buyers; a single person with income up to $218,200 can apply…

Adam Grubbs, who runs a municipal down-payment-assistance program in Aurora, Illinois, said local leaders there decided to use municipal funds (about $300,000) to give middle-income households support similar to a federally subsidized program for low-income buyers.

“It’s those police officers, your fire department staff, nurses, teachers: those people that, they do have good jobs, but with this housing market it’s still unaffordable for them. Even they need help trying to buy their first house,” Grubbs said.

These changes get at some key questions underlying how Americans view housing and housing policy:

  1. Who needs help regarding housing?
  2. Who deserves help regarding housing?

More broadly, is housing a human right, a privilege, available to those with the right resources, for those who work hard as individuals, or something else?

These changes in programs also remind me of a quote from a former Bank of England official: “Most countries have socialized health care and a free market for mortgages. You in the United States do exactly the opposite.” Providing homebuying assistance helps people achieve homeownership, a goal viewed as desirable in the United States.

Conversations in local communities can often help answer these questions. Local residents and leaders often have a sense of who they would like to see live in their community. Take the quote above involving Aurora as an example; municipal housing funds are designated for civil servants, potential residents that serve and who are seen as contributing to the community.

High housing prices and inheriting a house in California

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What if housing prices were so high in some American markets that a regular way people acquire homes is through inheritance? Take the case of California:

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About 18% of all property transfers in the state last year, representing nearly 60,000 homes, were made through inheritance, according to a recent analysis by real-estate data firm Cotality.

That share is a record for California in data going back to 1995, up from 12% in 2019. It is also roughly double the national share of 8.8% last year…

The state’s high rate of inherited homes reflects California’s unique circumstances: years of skyrocketing home prices, and tax policies that encourage owners to avoid selling their houses before they die.

The people who inherit these houses enjoy tremendous benefits. They can move into homes that they otherwise might not be able to buy at current prices, or they can sell them and keep the proceeds without having to pay capital gains taxes.

But the high rate of homes passed on after death is distorting the state’s housing market, favoring longtime homeowners and their families over all other home buyers.

The postwar idea of suburban homeownership included social mobility, the idea that someone could work hard and purchase their own house and plot of land. Follow the American pathway to success and it would end in homeownership.

But what if this does not always work out? Or if conditions in some places mean that the typical path does not work for a good portion of people? This postwar expectation was not necessarily available to everyone even then; communities and programs were not open to people of all races and nationalities.

The California case is one where observers can see that this social contract of homeownership is or is not working. Can a regular worker or household find a home in California? Wasn’t a lot of California’s growth due to this postwar social contract? In the American social and economic system, is inheritance a preferred or a good way to obtain a home?

It also remains to be seen whether the trend in California becomes the norm in other American settings or whether it is an isolated case with a unique housing market.

Two significant changes in the ways Americans perceive mortgages as illustrated in one paragraph

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A recent piece about mortgages in the United States contained this paragraph:

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The mortgage, the cornerstone of wealth building for generations of Americans, is vanishing. Data from the Mortgage Bankers Association show that Americans are applying for fewer mortgages than they have at any point in the past quarter century, including during the worst of the Great Recession, when the jobless rate was more than twice as high. Since the end of 1999, 96 of the 100 lowest readings of the MBA’s weekly index of new mortgage-loan applications have occurred in the past three years.

These sentences highlight two major changes regarding how Americans view mortgages in the last 80 years (post World War II era):

  1. The expectation that mortgages are available for everyone. This came about in the postwar era due to changes in mortgage terms as well as interest in homeownership. Regarding terms, mortgages became 30 year obligations, lowering the monthly cost for consumers. Regarding homeownership, pent-up housing needs (Great Depression plus World War II) plus an existing American ideology privileging property ownership led to mortgages used for single-family homes. And with the relative economic prosperity of the postwar era, more Americans than ever could access mortgages. This became the norm: follow the societal paths for success and secure a mortgage as a 20-something or 30-something.
  2. The expectation that mortgages serve as wealth building instruments. This has increased in recent decades as property values have risen dramatically in many parts of the United States. Prior to this, homeownership or property ownership was its own end. The owner could do what they wanted with the property. They could participate in local community life as a property owner. They could provide for their household. Now people expect to profit in the long-term off their mortgage: they will pay off interest and some equity and then sell it for more money down the road as they pursue their goals.

The hint in the article above is that pursuing and having mortgages has decreased and might decrease in the future. Does this then change perceptions regarding mortgages? Americans have not always viewed mortgages in the same way in the past and may not do so in the future.

The role of housing in the unsettled lives of American 30 to 45 year olds

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Where does owning a home fit in the changing lives of adults after emerging adulthood and in “established adulthood”? Here are some hints:

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When Mehta appeared on camera bouncing her newborn in her lap, that professor started laughing sympathetically. She’d just read Mehta’s 2020 paper on the life phase from age 30 to 45, which described it as a hurricane of major changes and responsibilities. Career advances, marriage, parenthood, homeownership, care for aging parents—for many people these days, the paper had argued, all of those milestones fall in a short and furious chunk of time. And here Mehta was, embodying that point.

The connection between Mehta’s circumstances and her academic focus wasn’t a coincidence. Mehta was in her 30s when she started noticing that no one seemed to be studying her own age group. Her colleague Jeffrey Jensen Arnett, the author of Emerging Adulthood: The Winding Road From the Late Teens Through the Twenties, had become an expert in ages 18 to 29. Psychologists of middle age, meanwhile, were usually observing those in their 50s and early 60s. She’d reached a part of life that was anything but quiet, yet when she looked to her field for answers, she heard relative silence.

Now, at 45, she has interviewed many, many people in this stage, which she named “established adulthood.” She believes that life for the youngish—especially for women—is getting only more hectic. The average man is parenting (a little) more than he used to, and the average woman is working outside the home (a lot) more than she used to. And compared with eras past, people today tend to be older when they begin hitting the classic landmarks of adulthood. A typical young person might once have, say, met a partner in their teens, married and started a family at 20-something, then taken on more career responsibility or begun caring for an ailing parent while in their 30s. Now all of these formative experiences are getting compressed. Many people do cherish this time, Mehta told me. But the fact remains that they’re in the “rush hour of life”—and they may be dealing with a milestone pileup…

Recently, this period of uncertainty has been getting longer: Many young people are saddled with debt, searching for work in a brutal job market, unable to afford buying a house. Building a career, a home, or lasting relationships—all things that can help shape a person’s sense of self—have become more difficult. And as emerging adulthood expands, it eats into the next stage of life.

From what I have seen of different surveys and published work, a majority of adults still want to pursue homeownership. Buying a residence is still an important part of adulthood and achieving the American Dream.

But this summary above and other work also suggests that this may be delayed and/or more difficult than in the past. The expectation in the postwar decades that young adults could buy a home in their 20s and perhaps on one family salary is hard to live up to today. A variety of social factors mean that homeownership is now delayed. This means more years of other living arrangements plus potential changes to how people feel about homeownership.

Given this increased difficulty, it would not surprise me if in the next decade or two fewer adults ages 18-45 say they want a home. When faced with obstacles, some people will turn to other priorities or adapt to the possibilities they do have. And it would get interesting if less than a majority of adults say they to own their residence; how does this change individuals, communities, the housing industry, and more?

Many don’t seem to like a 50 year mortgage; some lenders already offer a 40 year mortgage

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As people reacted – mostly negatively, from what I saw – to the possibilities of 50 year mortgages in the United States, one article noted that 40 year mortgages has a history and can be obtained now:

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I remember a time when a 40-year mortgage — and a 50-year adjustable rate mortgage — built some buzz back around 2006 and 2007 for people who were struggling to buy a home. It didn’t work out well if you had to sell when home prices collapsed.

The 40-year mortgage has a history going back to the early 1980s, according to an earlier report in the Detroit Free Press, part of the USA TODAY Network, when 18% fixed-interest rates were squeezing consumers out of buying homes. It never proved to be the most popular product…

If you shop around, some lenders are offering 40-year mortgages now.

Rocket Mortgage notes online that the Detroit-based giant offers a 40-year mortgage with the first 10 years being interest-only payments. These mortgages can be available for loan amounts between $125,000 to $2 million.

I wonder how many people apply for and receive 40 year mortgages.

Reading the reactions to the idea of a 50 year mortgage, I was struck by how much of the conversation was dominated by financial details. How much equity would a homeowner have after 20 years? When would the interest parts of the payment taper off compared to paying down principal? How would interest rates be different for a 50 year loan? I should not be surprised given how much homeownership is now seen in the United States as a financial investment. It is a tool to build wealth, perhaps the biggest tool most people will have.

But homes are about more than that. Americans have ideas about the virtues of owning a home compared to being a renter. A homeowner might feel differently and act differently regarding their property if they have a mortgage. Numerous neighborhoods and communities are structured around homeownership (such as many suburbs). Having a stable and affordable residence can help contribute to numerous positive outcomes.

Are we at a stage when public discussions about housing then are exclusively or are primarily about the finances of owning a home – which are certainly important – and not any influential factors that might encourage or discourage people from owning homes in the United States?

The geographic restrictions placed on Chicago’s Black residents by the turn of the twentieth century

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Historian Elaine Lewinnek in The Working Man’s Reward summarizes where Chicago’s Black residents lived in the late 1800s:

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By 1870 Chicago’s five thousand black residents lived in every ward of the city as well as numerous suburbs. Chicago had instituted some progressive policies during Reconstruction, including a civil rights law and, in 1874, an officially desegregated school system. After the collapse of Reconstruction, many blacks who had held political office in southern states relocated to Chicago in what observers called “the Migration of the Talented Tenth.” By 1893 Chicago’s black population was fifteen thousand, still just a small fraction of the more than million Chicagoans. Some blacks settled north of Chicago, near domestic service jobs in the suburb of Evanston, as well as on the near West Side. Many gathered in the neighborhood around Clark and Harrison Streets, on the south fringe of Chicago’s business district, an area that escaped the Great Fire of 1871 but was completely burned in 1874.

During the 1880s and 1890s, pushed by racism and pulled by their own preferences for living near black-led institutions, new black migrants were increasingly limited to Chicago’s Black Belt on the South Side. Extending just two blocks west and east of State Street, stretching south to Thirty-fifth Street and eventually Fifty-fifth, this narrow strip contained 56 percent of Chicago’s blacks in 1900, 78 percent, and 90 percent by 1930. (152-153)

This mirrors national trends. W. E. B. Du Bois discusses this in The Souls of Black Folk where he looks at what was possible during Reconstruction and then quickly disappears once that period ends. James Loewen argues in Sundown Towns that after the movement of Black residents all over the United States after the Civil War, many communities in the United States by the late 1800s restricted Black people and other people of color from staying or living in their towns.

And Chicago is a particularly noteworthy example of this because of how strong these geographic lines become. By the early 1900s, violence, formal and informal policies, and social interactions reinforce these boundaries in such a way that Chicago is one of the most racially segregated cities in the United States by the end of the century.

But these boundaries were not always there. They do not have to be there in the future. Lewinnek argues they were the result of particular actions and conditions, including the efforts of working-class homeowners.

The percent of income Cook County residents pay to own their home

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How much does it cost to be a homeowner in Cook County?

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Homeownership expenses — including typical monthly mortgage payments, homeowners and mortgage insurance and property taxes — accounted for 29.2% of the average income earned by a Cook County resident as of the middle of this year, up from the 23.2% historical average based on data collected between 2005 to 2025, according to ATTOM, a national property data provider.

That is lower than the 33.7% national average and slightly higher than the 28% typically recommended by mortgage lenders, the data shows.

For the average Chicago resident, 42% of their mortgage payment is for expenses such as property taxes and insurance, marking it the fourth-highest share in major markets across the country, according to Andy Walden, head of mortgage and housing market research for Intercontinental Exchange, a data and financial technology firm. This is in large part, he said, because of property taxes.

This particular article suggests these costs are high for those who want to start a family; they may be able to purchase a home but there is not much left over after that point. The figures above help provide context for the 29.2% homeownership cost:

  1. This is higher than the average in the past. Homeowners in Cook County are now paying more per month than previously.
  2. The figure it higher than the 28% lenders might recommend.
  3. But the Cook County percentage is lower than the national percentage.
  4. And out of that overall percentage, Chicagoans tend to pay more for property taxes and insurance.

And a little more context: the homeownership rate in Cook County is about 62.5%.

All interesting information. Owning a home takes resources for purchasing it and maintaining it. The same lending practices that make it possible to get a mortgage for 30 years also mean costs for that long. But could the issue be something different: the costs of having children? How have those costs changed over time?

The Chicago area is often regarded as having a medium cost of living. Big cities in the Northeast and West cost more, places in the South and Midwest cost less. People living in these different contexts adjust. With the relative costs of living, how much does it differ to raise children in each place?

Homeownership is one of the biggest financial investments that a person or household will make. How many Americans now experience or believe that pursuing homeownership, a vital part of the American Dream, impedes their ability to pursue having kids?

Whether Americans will be happy if/when housing values go down

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If housing prices drop, will Americans be happy? The CEO of Redfin has thoughts:

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I think we’re at an inflection point. So mostly people who have had to sell their home have been able to do so quite easily over the past two or three years. So even in the post-pandemic correction, it was fairly straightforward.

But now home sellers are struggling, especially people who bought a house during the pandemic. We are talking to them about lowering their price and they can’t, because they’ll be short on their mortgage. Now, we’re not going to have anything like the great financial crisis in 2008, where there was a wave of foreclosures. But for a particular population of folks who did buy during the pandemic, it has suddenly gotten very hard to sell their home and pay off their mortgage. And so right now the market is just teetering in a very unhappy equilibrium. I think that prices will come down, and I’m one of the people who views that as good news.

When bread prices come down, when gas prices come down, most Americans view that as cause for celebration. But when home prices go down, about half of us are worried about it and the other half are throwing a party. And really, for the younger generation, we need prices to come down…

So about 75 percent of American homeowners have a mortgage below 5 percent. We’re unlikely to see a rate like that anytime in the foreseeable future, and so those folks create this rate-locked inventory. Many, many people in America—more than half of all Americans—really couldn’t afford to buy their own home at current interest rates. So it’s very common for us to go to a listing consultation with someone who has had another baby or is going through a divorce, had some kind of life event where they need to move, and when they realize what they’re going to be able to afford from the sale of their home, they decide to stay put instead.

If the goal is to have a majority of Americans happy about housing prices, that might be hard at this particular moment. As described above, different actors may want higher or lower prices. Those wanting to rent or buy want lower prices. Those who are looking to sell might want higher prices. And the 0homeownership rate in the United States is a little over 65%.

But one hint above is that more people – a majority – might win if prices come down. If prices are too high and interest rates stay roughly where they are, there is little movement in the housing market. So could Americans be convinced that a drop is good? This would help more people get into the market and others to sell. (I wonder if it also might create more demand that would then raise prices again.)

Perhaps this is not the right topic in the first place. Focusing on this particular issue and moment obscures the larger issue: what is the long-term trajectory for American housing and for the ability of buyers and sellers? Do people perceive they can purchase a residence? What policies further (or hinder) a longstanding American idea that homeownership is a critical element of the American Dream?

American Dream past and future about status? Stability?

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What is the American Dream actually about? An editorial in the Chicago Tribune considers how younger Americans see the American Dream:

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Lower marriage rates and lower homeownership among younger adults seems to indicate the increasing elusiveness of what we have long considered the American Dream of owning your own place and building a family.

So what’s going on? Is this a generational shift in values — or the predictable result of a system that’s become too expensive and too precarious for anyone to gain a foothold?…

So is the American Dream disintegrating? Or is it changing shape?

We think the answer is a bit of both. Affordability plays no small role in explaining why fewer young people buy a home or choose to go into debt for a degree…

If Gen Z does bring marriage back into fashion, it won’t be a return to tradition so much as a reinvention of it — one that values stability, yes, but also flexibility and purpose. That’s the American Dream now.

The suggestion above is that the American Dream involved (1) homeownership and (2) having a family. Have these two things and you have made it. The contrast is provided at the end. Younger Americans perceive more instability in the economy and in relationships. The old path of securing a home and family is not as easy. They want something different: “flexibility and purpose” rather than “stability.”

How much of a change is this? The key might be getting at the motivations behind achieving these goals. What was having a home and family about? Reaching a certain middle-class status? Keeping up with the Joneses? The shift toward “flexibility and purpose” is about what exactly: self-sufficiency? Status? A better sense of self?

In other words, I wonder if this is more about changing methods to achieve the American Dream rather than a shift in goals. As noted in the editorial, many younger Americans still want to own a home. Many will pursue relationships. But the means to getting here may have changed. There is a narrative now that this former path was easy: the decades after World War Two provided easy opportunities for many Americans to buy a home and start a family. Perhaps this was a unique time in history with relative prosperity and the conclusion of a major war where the United States emerged as a winner.

Imagine several decades from now when the postwar era is one hundred years ago. Americans may still want the same things – purpose, a sense of achievement, a certain status – but what form that takes may have changed. What marks a middle-class life may look different. Feeling accomplished or stable may take a different form.

The “natural flow” of people toward renting rather than homeownership?

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In discussing the construction of a new suburban apartment building, one person describes the demand for the apartments:

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“We have seen the rent increases in the suburban market in general have been pretty strong over the last few years,” he said. “There’s a lot of people who normally would have gone out and maybe rented for a few years and then bought a home, are not doing that. They’re staying in apartments longer.

“So you have the natural flow of new people coming in and less people walking out the door for home ownership, and a lot of that is just due to the high interest rate environment and people wanting to retain the flexibility of renting right now,” Devries explained.

Is this “natural” that more people or certain people at the moment are willing to rent compared to own? These two paragraphs mention several reasons why this shift did not just happen:

  1. Increase in rents. This means at least some apartments are available to those with the resources to pay for it.
  2. Higher mortgage rates mean homeowner’s monthly payments are higher.
  3. Renting can offer flexibility in a tight housing market or when people are feeling economic uncertainty.

These are the result of social, economic, and political forces. And I wonder if all of these people who find it “natural” to rent now would prefer to own a property. If conditions were different, would they rather purchase a home, condo, or townhome? Or what if this to-be-constructed building did not contain apartments but rather contained condos?

The “natural” flow in American life for roughly the last century has been toward single-family homes and homeownership. This takes different forms – not just homes but condos and townhouses – and may not appeal or be available to everyone. But my guess is that if the three listed conditions above were more favorable toward purchasing units, that is what more people would seek and developers/builders would produce.