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Homes in America Overview

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Homes in America

Confucius stated what many understand from experience and by instinct: stable homes are integral to healthy families, strong communities, and equitable societies. Community development financial institutions (CDFIs) prioritize fair financing for affordable homes because providing more good homes helps more families fully participate in the American ideals of equal opportunity and the pursuit of happiness.

Homeownership in America has increased tremendously over the last half century. Until 1950, renters outnumbered homeowners. By 1950, the majority of Americans owned their own homes and, except for a slight dip in the 1980s and the  current decrease caused by subprime foreclosures, the homeownership rate has steadily risen to today’s level of almost 69 percent.

Broken down by race, the numbers tell a different story. The white homeownership rate was 70.5 percent in 2005; for African Americans, it was 48 percent.166 According to researcher William Collins, “The racial gap in the home ownership rate was nearly the same in 2000 as it was in 1900, approximately 25 percentage points. It is notable that the vast majority of black-white convergence in ownership and housing values occurred before the federal Fair Housing Act and related anti-discrimination policies.
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Enabling low-income families to purchase houses with conventional first mortgages and no- or low-interest second mortgages goes a long way to solving the affordability problem for low-income homebuyers.

Indeed, the history of the Federal Housing Administration (FHA) exemplifies the American housing market’s success and the negative effects of discriminatory policies. The FHA was created during the Depression, helping to jump-start the housing market and, along with the Federal Home Loan Bank System, providing a platform for tremendous growth in homeownership. It succeeded in many ways, and the homeownership rate soared.

This is an excerpt from The NEXT American Opportunity. The full text can be downloaded as an Adobe PDF Document.