It was President Franklin D. Roosevelt who called America "a nation of
homeowners," but even he might be surprised at how dedicated Americans are
in pursuing this American Dream.
Fannie Mae's latest National Housing Survey found that 66 percent of
Americans say they believe now is a good time to buy a home, even though
only 47 percent are optimistic about the economy. Indeed, 57 percent of
renters are "very" or "somewhat likely" to buy a home in the next three
The lure is obvious: most people want a home to call their own and would
rather invest their housing dollar than spend it on rent. But 84 percent
say a major reason is that homeownership is the best possible long-term
investment - better than putting money in a retirement plan, savings
account, mutual funds or the stock market. They are on to something. If a
family put $10,000 down on a $100,000 home in 1990, and it appreciated at
the average national rate since then, that home would gain about $67,000 in
tax-free equity wealth. Meanwhile, that $10,000 invested in the stock
market would gain only $16,000 - and less after capital gains taxes.
Owning a home provides broader benefits - stronger and more financially
secure families, tighter communities with better schools and an involved
citizenry, and a stronger local and national economy. The challenge now is
to ensure that everyone in America who wants to own a home has the
opportunity. Today, more than 68 percent of Americans do, but only 50
percent of minority families do.
The Fannie Mae survey revealed four barriers to overcome:
Some Americans have too little information - or the wrong information -
about buying a home. Many believe that you need more money, a steadier job
history or a better credit than is really required. Some still believe a 20
percent down payment is required, when 10 percent, 5 percent and even 1
percent mortgages are widely available, especially to consumers with good
Of course, some Americans do have too little income or savings. More than
half of those who started but did not finish the home buying process found
it was more expensive than they initially thought or had concerns about
getting a low-cost mortgage given their credit history. This is especially
true in Indian country, where poverty rates consistently exceed the
Behind cost, credit concerns are the second leading reason renters offer
for not buying a home - 39 percent thought their credit histories would
make it difficult to secure a mortgage. Only 28 percent of renters say they
have a great deal of experience with credit and debt.
Many Americans simply worry whether they can complete the home-buying
process, so they never start. That is understandable - especially for
people who have faced discrimination or language barriers. Some 64 percent
of all Americans worried home prices would increase before they finished,
putting closing day perpetually out of reach.
In Indian country, these barriers are made even more challenging by the
legal framework that governs tribal lands. Addressing the legal issues such
as tribal sovereignty and tribal court jurisdiction is a prerequisite for
increasing the flow of capital to tribal lands. This is not an easy task,
and it must be done in a manner that can both encourage more private
investment and protect each tribe's unique and sovereign status.
While these barriers are challenging, none of them are insurmountable. For
example, armed with our survey data, Fannie Mae has launched an intensive
plan to help mortgage lenders break down the barriers facing families who
want a home. The plan includes home-buyer education; creative, low-cost
financing for families of very modest means, special mortgages for
credit-impaired borrowers and investment in affordable housing and
community development. Thanks to our partnerships with tribal housing
leaders throughout the country, we are working more closely than ever with
individual tribal governments to create a conventional mortgage finance
system that also protects tribal sovereignty and land status.
This National Homeownership month, let us celebrate these challenges as
opportunities and commit to helping and encouraging those families who
continue to dream of owning their own home.
Bob Simpson is director of Fannie Mae's South Dakota Partnership Office and
chairman of Fannie Mae's Native American Business Council. He can be
reached at (605) 782-2545 or firstname.lastname@example.org.