Home ownership is so much a part of the American Dream that it can be said to define it. For most Americans, however, ownership is an illusion. Banks own our homes for 20 or 30 years (or more) as we chip away month by month at acquiring the deed.
The economics of home ownership make sense when the tide is rising – when housing prices are moving up and we partake in the appreciation of our homes. This has been the case for a few decades, though it’s sobering to know that this appreciation is an aberration. It may come as a surprise to you (as it did to me) that, historically, homes don’t change their value very much.
Our current economic crisis has penetrated the illusion of home ownership for many Americans. Many homeowners have been unable to make mortgage payments, or to escape the burden by selling their homes (especially when the market value is below the amount owed to the bank).
Here are the five states that topped foreclosures in January 2009, in order: Nevada, California, Arizona, Florida, and Oregon. (See rankings for all states here.)
My state of Michigan ranked 7th. And, these rankings don’t reflect how the housing crisis differentially affects minorities, the elderly, and others.
What do you think?
Will Obama’s economic stimulus package help? The plan would lower mortgages for many Americans to be no more than 31% of their income. Lenders would have to count payments against principal rather than interest. Major lenders have established a temporary moratorium on new foreclosures, pending Obama’s announcements this week.
How are your spirits this week regarding our economic crisis?
Will Obama’s plan help to preserve the American Dream of home ownership?
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