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Daniel Wagner is CEO of Country Risk Solutions and author of
Managing Country Risk ( managingcountryrisk.com; not available at Costco).
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JUNE 2015 The Costco Connection 23
ACCORDING TO the
U.S. Census Bureau,
home ownership dropped
to a 20-year low of 64. 5
percent in 2014, having
been on a continual decline since 2004, when
the rate stood at 69 percent. The last time the rate of home ownership
dropped below 64 percent was in 1990. There is
every reason to believe that the decline will
continue. 2015 could see that figure dip below
64 percent for the first time in 25 years.
If you have tried to get a mortgage loan
lately, you know it is next to impossible without
pristine credit and virtually no debt. But how
many Americans meet that standard?
According to a 2014 survey by Bankrate, a
financial and mortgage information website,
more than a third of working-age Americans
haven’t saved any money toward retirement,
including 26 percent of 50- to 54-year-olds,
who have no savings at all. This is evidence that
many potential buyers—even late in life—are
essentially frozen out of the marketplace due to
a lack of financial resources.
Even those with a job and enough money
for a down payment may be locked out because
their credit score is not high enough, or they
may not have a long enough track record of
performance to satisfy banks’ requirements.
Potential buyers have proven to be conservative in how they choose to invest their money,
and when. The Great Recession removed the
illusion many people had that owning a home
was a pathway to future wealth creation. Today,
it is more of a way to simply stop throwing
money out the door on rent, and to take advantage of one of the few tax deductions ordinary
Americans can claim.
Until we can honestly say there is genuine
and sustained growth in the housing market, we
cannot say our economy is in good shape.
Owning a home will remain just a dream for
tens of millions of people in the U.S. for the foreseeable future. Let us hope that the modest
recovery that has begun can indeed be sustained.
With so many countries around the world
entering either a severe economic downturn or
a recession, it may not be long before the U.S. is
forced to address its next recession. History
dictates we are due for one. Expect consumer
sentiment—which measures the overall health
of the economy, based on consumer opinion—
to decline this year, and for home ownership to
continue its decline. C
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Chris Polychron is president of the National Association of Realtors®
in and aspire to homeownership. According to
a recent study by the
Demand Institute (de
studies how consumer
demand is evolving around the world, more
than eight in 10 millennials (18- to 29-year-
olds) already own or have plans to purchase
their own home.
There are many reasons why it makes sense
for people to consider buying instead of renting.
According to the U.S. Census Bureau, the
nation’s rental vacancy rate has declined rapidly
since 2010, and the country is now seeing the
lowest vacancy rates in more than 20 years.
This high demand for rental housing is
pushing up rental costs, which were recently
up 3 percent from a year ago. Higher rents,
combined with historically low mortgage interest rates, mean that in some markets a monthly
mortgage payment may actually be cheaper
than rent. And unlike rent, a fixed-rate mortgage won’t increase annually or at the landlord’s discretion.
For individuals who can qualify and afford
it, homeownership continues to be one of the
best investments, both personally and finan-
cially, a person can make. Owning your own
home offers benefits beyond shelter, such as
numerous tax incentives, and helps build finan-
cial security and equity over the long term.
A home of one’s own also offers many lifestyle benefits. It’s a place in which you can make
memories, feel comfortable and secure, and
decorate and use as you like. It’s also a source of
accomplishment and pride.
The decision to own a home is a very personal one, but I believe that anyone who is able
and willing to assume the responsibilities of
owning a home should be able to pursue the
dream. Affordable mortgage credit access has
been tight, but recent developments, such as
reducing down-payment requirements and
mortgage insurance premiums for some gov-ernment-backed loans, have improved consumers’ ability to obtain a mortgage, especially for
Buying a home can sometimes be a challenging process, and it isn’t always right for
everyone, but there’s a reason home ownership
is called the American dream. If you are ready to
assume the responsibilities of owning a home,
you can begin investing in your future. C