Notwithstanding trillions of dollars in home loans, our affordable homeownership policies have failed to achieve two primary goals – broadening homeownership and achieving wealth accumulation for low- and middle-income homeowners. This result has primarily been due to a reliance on low-down-payment, 30-year mortgages and other highly leveraged lending. These policies have driven up home prices faster than incomes, making homes less, not more, affordable.
Today’s homeownership rate of 63 percent is no higher than it was 50 years ago. At the same time, affordable housing policies have been unsuccessful at building wealth. Between 1989 and 2013, median wealth for households in the 40th to 60th percentile has decreased from $76,100 to $61,800, while median wealth for households in the 20th to 40th percentile has decreased by more than 50 percent, from $44,800 to $21,500. These are the income groups that affordable housing policies aimed to help.
This article appeared in US News & World Report on October 22, 2015. It will be published here on October 29, 2015.