Where has Housing Gone

In 1926 it was not uncommon for borrowers to pay half of the purchase price of a home as a down payment. The reasoning behind this was that it made the homeowner more responsible.  Research had shown commitment to home ownership to be an important component to wealth accumulation and economic security. The New Dealers felt it was a way industrial workers could accumulate wealth like other property owners.  The portion of the monthly mortgage payment that paid down the mortgage constituted forced savings and it allowed new stability and status.  Heck even your children would become better educated as a result.

As with so many things that start off well,  things change.  Along came better and easier ways for the borrower to finance home ownership without downpayment wealth building savings, and he now could also receive government subsidies as well.  Lost forever to the home owner was the status of the American dream, and things went downhill from there.  It now was all about debt and capital gains…

Read Christopher Papagianis’ fascinating article on the rise and fall of housing and what we should do about it.