Homeownership: A Housing Success StoryAbstractOwning one 's own home is one of the defining elements of the American dream. But, only a few years ago, this part of the dream seemed to be fading away. After 40 years of continuous progress, homeownership became less achievable, and the Nation 's homeownership rate actually declined in the early 1980s.Between 1985 and 1994,the homeownership rate remained virtually unchanged.Making homeownership more attainable became a goal early in the administration. In late 1994,President Clinton set as a national goal to raise the homeownership rate to 67.5 percent by the end of 2000.Beginning in 1995,the homeownership rate has risen almost steadily until, by the third quarter of 2000,it was 67.7 percent–surpassing the President 's ambitious goal. This remarkable turnaround in the homeownership rate is attributable both to broad economic factors and to specific policy initiatives. Balancing the Federal budget allowed the Federal Reserve to lower interest rates, creating the most favorable climate for financing a home since the 1960s.Strong economic growth and low unemployment boosted consumer confidence to record levels and encouraged many families to consider homeownership for the first time. A surging stock market created wealth that allowed parents and grandparents to help young Americans afford their first home. The administration reinforced these economic incentives with policy initiatives focused on broadening homeownership. Enforcement of the Community Reinvestment Act (CRA) and the Home Mortgage Disclosure Act (HMDA) was strengthened. HUD used its oversight of Fannie Mae and Freddie Mac to encourage those entities to reach out to low-income borrowers and areas underserved by the private market. Finally, a revitalized Federal Housing Administration (FHA) has substantially increased lending to African Americans, Hispanics, and other traditionally underserved groups and, in doing so, has worked to increase homeownership opportunities of these segments. This article documents the progress in homeownership, examines how recent improvement in the homeownership rates have affected different segments of the population, analyzes whether the booming economy and other policy changes were more important factors in the recent improvements than demographic shifts, provides a reminder that important gaps still remain in the ability of families to own their own home, and discusses the role of specific policy initiatives. Homeownership: A Housing Success Story (*.pdf)
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