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20 Years Later, Bill Clinton's Home Ownership Dream For America Is Dead

In “America’s Housing Problem: Buying And Renting Are Both Unaffordable,” we documented the rather disconcerting situation facing America’s renters.

Despite the fact that Fannie Mae and Freddie Mac now back home loans with down payments as low as 3% (down from a previous floor of 5%) and despite the fact that the FHFA’s move to lower the down payment requirement effectively forced FHA to cut premiums in order to stay competitive, presumably making housing even more ‘affordable’, the homeownership dream is quickly slipping away for many Americans. 

In short, non-existent wage growth (remember, wage growth in America is now almost solely concentrated in the hands of what the BLS describes as ‘supervisory’ workers who make up less than a fifth of the labor force) and crushing student debt (the Class of 2015 graduated with an average debt load of $35,000) are conspiring with the BEA’s fabricated, double-adjusted “recovery” to make saving enough for a down payment virtually impossible.

Meanwhile, the very fact that many Americans are shut out of homeownership means more demand for rentals which in turn drives up rents, squeezing household balance sheets further and effectively leaving many stuck between homes they can’t buy and rents they can’t afford. The result: the homeownership rate in America is now back to where it was 20 years ago and some Americans face the very real possibility of not having a place to live at all. 

Now, the question is whether the homeownership rates that persisted in the years leading up to the crisis were realistic in the first place or simply represented what happens when a political mandate (promote the “American Dream”) meets the Wall Street securitization machine. 

Whatever the case, renewed scrutiny on the demise of the American homeowner comes at a rather inconvenient time because, as WSJ reports, this month marks the twenty year anniversary of Bill Clinton’s National Homeownership Strategy which was unveiled with the help of Jean Mikitz, an Allentown, Pennsylvania resident who, at the time, had just bought a home with her husband Jim with the help of an FHA guaranteed loan — Jim eventually went into foreclosure. Here’s more:

This month marks 20 years since President Bill Clinton unveiled his “National Homeownership Strategy,” a 100-point action plan that put as its overarching goal achieving an “all-time high level of homeownership in America within the next six years.”

 

That set in motion an effort by both parties in Washington to work with the private sector to loosen lending standards and make it easier for middle-class Americans with less savings or inherited wealth to purchase homes.

 

Jean and Jim Mikitz of Allentown, Pa., had just bought a home using a loan backed by the Federal Housing Administration when the Clinton administration was rolling out its homeownership campaign. Their mortgage broker connected them with administration housing officials, which is how Ms. Mikitz ended up introducing Mr. Clinton at his June 1995 speech, a few weeks after they closed on the purchase.

 

The homeownership rate, then at around 64%, steadily climbed to 69% in 2004, after President George W. Bush similarly embraced a goal of increasing homeownership. Today, the homeownership rate has fallen back to below where it was 20 years ago following the bursting of the housing bubble, which led to millions of foreclosures.

 

Mr. and Ms. Mikitz’s story, it turns out, also ended in foreclosure. Mr. Mikitz, a 41-year-old mechanic, lost the house in 2004, according to public records. Mr. Mikitz said they stopped making payments on the home when he and his wife divorced. “It pretty much forced me into bankruptcy,” he said. His former wife couldn’t be reached for this article.

There you have it.

The American Dream in one cautionary tale.

We’ll leave you with Clinton's 1995 speeach introducing The National Home Ownership Strategy.