Affordability in Cohousing

Homeownership and Being Housing-Secure

Family moving with a WagonMoving from place-to-place is personally stressful and results in time lost from jobs, compounding the problem of unemployment and high rents. Students who have moved more than three times over a period of six years can fall a full academic year behind their peers. The principal cause of student transience is housing instability. Families who are poor move 50 to 100 percent more frequently than families who are not poor. Homelessness is a major reason that children must change schools because residency rules and lack of transportation require transferring when a shelter assignment changes. One out of every 30 children in the US is homeless.

Ownership Isn’t Everything But Housing Is

For many people at some point in their lives, renting is the only option. Twenty-somethings are often still mobile and have unclear futures. They aren’t ready to make a commitment or don’t have secure incomes that qualify them for a mortgage. They haven’t had time to save for a down-payment anyway. So when I encourage finding ways to promote homeownership, I also realize that it isn’t the best solution for everyone or at certain times of life. But in the long-tern, homeownership is more housing-secure than most other forms of housing.

Housing is a life-supporting basic need for all of us. In a just and democratic society, we should make it available to everyone. Homeless children will not thrive in temporary and changing shelters. Neither will homeless adults. Everyone needs a place to feel safe with no fears of losing their home without warning.

Homeownership Is a Rich American Fantasy

It is not just an American dream to own your own home. According to the Pew Research Center, the number of adults in the US who owned their own homes in 2013 was 65%. That may sound like a good number, more than half, but it is lower than 32 of 42 other counties Pew studied. In Romania, the rate was 96.6%. In Croatia, it is slightly above 92%. In Chile, it is 69%. These countries are less wealthy, have less stable governments, and have experienced major political and social unrest in the last 50 years. Even some former socialist countries have higher homeownership rates than the US which is wealthier, more politically stable and has not been devastated by a war on its land in 150 years.

The high rates of homeownership are related to the large rural populations that have built their own homes and the rapid privatization of public rental housing after the fall of the socialist governments in the 1990s. In contrast, homeownership in the US peaked at 69.2% in 2004 and then quickly returned to its average rate of 65%. Homeownership has not risen in the US in spite of two gigantic government-run mortgage support programs in the Federal Housing Finance Agency (FHA), Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac were created by Congress… to provide liquidity, stability and affordability to the mortgage market. They provide liquidity (ready access to funds on reasonable terms) to the thousands of banks, savings and loans, and mortgage companies that make loans to finance housing… [They] help ensure that individuals and families that buy homes and investors that purchase apartment buildings and other multifamily dwellings have a continuous, stable supply of mortgage money.

They guarantee the timely payment of principal and interest on mortgages to encourage investments to expand the pool of money available for mortgages and helps lower the interest rates. In 2013, they issued 78% of the mortgage-backed-securities in the US. They have continued the practice of approving fewer mortgages for Black and Hispanic applicants and/or approved them at higher interest rates than those for other ethnic groups.

Homeownership Is a Reasonable Expectation

It is not unreasonable to advocate for much higher ownership rates in the US and to correct the systems that discourage and even prevent ownership among some groups. The major reasons applicants were turned down were the debt-to-income ratio and poor credit history. Is that actually a reliable measure? Less income secure households are likely to be so because their housing costs are well above 30% of their income. Poor credit is often the result of the need to pay rent at the expense of other debts. And frequent need to spend days finding housing is one of the reasons people lose jobs.

Switchplate Dingbat

(See Evicted: Poverty and Profit in the American City by Matthew Desmond. Additional discussion of Evicted will be an upcoming attraction in Affordable Cohousing.)

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