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Housing and the American Dream

The American dream. Is it alive and well, or is it in desperate need of help? If you own your home in the United States, you are supposedly living the dream, but is the dream becoming a reality, or is it a nightmare of epic proportions? Being able to afford a home seems to be out of the reach of many Americans.  

Homeowners are borrowing more money than they used to, and less people are buying. The statistics show that while folks in the USA used to put down 20% on the purchase of their property, nowadays the average down payment is just 5%. This means that you are paying off 95% plus interest over time.

As overall homeownership rates fall, the result is that real estate wealth appears to be creating more of a gap as the wealth gets concentrated in a smaller slice of the population. As the gap widens between the property owners and those who cannot afford it, you could expect to see higher rates of loan delinquency. However, that is not the case at all.

Statistics show that delinquency rates are in decline, which means that although Americans are borrowing more, they are sticking to their payments and getting on the property ladder. The fact that they are borrowing more may be a worry, but owning their own home could help them later in life, as they will at least have an asset that is hopefully paid off – or at least paid down so that there’s equity in it.

The Federal Housing Authority’s statistics show that the average amount borrowed for first time home buyers is just under $200,000. Some folks will have owned more than one property and will have more equity or opportunity to generate wealth or equity with their homes.

Saving to put down a sizeable deposit on your home is an excellent plan, especially if you don’t want to have to borrow a large amount to be able to afford it. Setting money aside so that when you do buy, you are able to spend money on upgrades or other things like retirement saving or even a holiday rather than servicing a mortgage payment.

 

IMPORTANT DISCLOSURES                                                                

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

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