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June is American Housing Month Thumbnail

June is American Housing Month

Photo by Benjamin Cheng on Unsplash

Owning your own home is the American dream come true for many and is often an important milestone in creating a bright financial future for yourself and your family. Owning a home expands future options because, down the road, you may be able to sell for a profit or build wealth with increasing home equity.

Real estate has proven itself to be a great hedge against inflation. Over time, housing values have increased in value consistently, even after economic downturns, when prices stagnate, because home prices have historically always stabilized and risen once again. The benefits of homeownership aren’t purely financial, and some of those benefits might include:

  1. Community involvement – When you own a home, you become part of your neighborhood and are more likely to volunteer and get involved to keep your neighborhood looking great.
  2. Pride of ownership – You can customize the home to your unique personality and values.
  3. Security and privacy – You don’t have to worry about neighbors listening through the walls.
  4. Stability – A mortgage remains relatively steady while rents continue to rise.

June is American Housing Month, or National Homeownership Month, and celebrates the value that owning a home brings to families and neighborhoods across America. Let's learn more about the occasion and why owning a home is important to many people.1

A History of American Housing Month

Before we celebrate American Housing Month, which became an official occurrence in 1995 (and a month-long occasion in 2002), it is important to note that many important moments in history led up to this celebration today. Let's look at a brief timeline leading up to American Housing Month:

1862 - Abraham Lincoln signed the Homestead Act, which gave settlers 160 acres each if they agreed to build a home and farm the land.2

1863 - The National Currency Act was formed to establish a federal banking system, meaning banks could loan money for mortgages to a new class of home buyers who were willing to buy on credit.3

The 1930s - The deepest depression in U.S. history hit home ownership hard. Banks had no money to loan, and Americans had no money to buy. To bolster the failing economy, President Roosevelt established the Federal Housing Act (FHA), which made homeownership possible for forty-four million citizens and helped prevent another market crash.4

1937 - The Roosevelt Administration formed the Housing Act, which subsidized public housing for low-income citizens.5

1944 - The GI Bill took effect, with subsidized mortgages for WWII vets. This bill changed housing affordability for families and strengthened the American economy into a world powerhouse.6

1949 - The Housing Act was passed during Harry Truman's presidency, allowing the Federal Government to issue mortgage insurance on home loans and initiating the construction of low-income public housing.7

1968 - President Lyndon Johnson signed the Fair Housing Act, which banned housing discrimination (so-called “redlining”) based on religion, race, gender, or national origin8 (although the legacy and influence of redlining continues at some level to be a barrier to well-being for many and a headwind to broader economic growth for all).

1995 - President Clinton declared National Home Ownership Week to increase interest in owning a home.9

2002 - President Bush expanded the observation of National Home Ownership Week to the whole month of June.10

Homeownership in America Today

In honor of American Housing Month, let's examine the state of homeownership in the US today.

Approximately 65% of people own their own homes, but homes have become less affordable than they used to be. According to The Zebra, in 1968 (the year that redlining was outlawed), approximately 68 out of 100 Americans could afford a home, but now, only around 43 out of 100 can afford one. This is due to several factors, including rising home prices, rising interest rates, decades of stagnant wages for middle- and low-income families, the record level of absentee homeownership, and a lack of supply.11,12

Baby Boomers, or those born between 1946 and 1964, now own 42% of the real estate wealth in the US. They also furthered the idea of living in suburbs versus city centers.13

Generation X, or those born between 1965 and 1976, is the next-richest generation. Most Gen Xers can afford to buy above the median price of $367,500. In 2019, Gen Xers made up the largest share that purchased detached single-family homes, at 88%. They also statistically buy the largest homes in size at 2,100 median square feet.14,15,16

Millennials, or those born between 1977 and 1995, have it a little harder. Only 28% can afford their own homes. Many have resigned to renting because of their student debt burden, stiff competition from other generations who have more cash, and little savings.15

Generation Z and beyond, or those born after 1996, are young people born into the digital age. They are highly technical, diverse, and values-oriented people. Many Gen Zers still live with their parents or in multi-generational houses, but those graduating college may be renting now. Although Gen Zers hope to own homes someday, 14% name saving for a down payment as their top impediment. Other impediments include college debt, credit scores, and job security.16

Homeownership has always been an important part of the road to prosperity. It benefits not only individuals and families but also communities and local economies when homeowners become invested in their neighborhoods, schools, and businesses. American Housing Month is a great time to celebrate affordable housing including community land trusts17, those saving to own a home someday, and the American Dream of home ownership.

1. https://nationaltoday.com/national-homeownership-month/# 
2. https://www.archives.gov/education/lessons/homestead-act# 
3. https://www.occ.treas.gov/about/who-we-are/history/founding-occ-national-bank-system/index-founding-occ-national-banking-system.html# 
4. https://www.investopedia.com/terms/f/federal-home-loan-bank-act.asp 
5. https://www.fdrlibrary.org/housing
6. https://www.archives.gov/milestone-documents/servicemens-readjustment-act#
7. https://en.wikipedia.org/wiki/Housing_Act_of_1949#
8. https://www.hud.gov/program_offices/fair_housing_equal_opp/aboutfheo/history#
9. https://www.washingtonpost.com/archive/politics/1995/06/06/clinton-pushes-homeownership-strategy/f256ec84-dbf2-4a2d-b487-2882fa157da3/
10. https://georgewbush-whitehouse.archives.gov/news/releases/2002/06/20020604-23.html
11. https://www.thezebra.com/resources/research/homeownership-statistics/#
12. https://www.nytimes.com/2021/07/08/realestate/baby-boomers-rich-with-real-estate-and-not-letting-go.html
13. https://ycharts.com/indicators/us_existing_singlefamily_home_median_sales_price
14. https://www.nar.realtor/blogs/economists-outlook/gen-xers-purchased-multigenerational-the-biggest-homes#
15. https://www.cnbc.com/2022/06/12/millennials-and-gen-zers-want-to-buy-homes-but-they-cant-afford-it.html
16. https://www.propertyshark.com/Real-Estate-Reports/2022/01/04/generational-survey-2022/
17. https://www.investopedia.com/community-land-trust-5206374

This content is developed from sources believed to be providing accurate information, and provided by Strategic Financial Planning, Inc. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered legal, investment, or tax advice.