The American dream of homeownership seems to be harder to reach for many in our current economy. Prices go up, and earnings just don't seem to rise as quickly. Savings accounts and valued investments seem to dwindle. The trickledown effect of a suppressed housing market can be far-reaching and devastating.
According to a study conducted by Fallon Research, 91 percent of homeowners and 72 percent of renters still believe that "owning a home is a good financial investment." Owning your own home gives you more freedom of personalization and comfort. Though there may be risks, owning a home also provides a chance to build equity and stability for a family. Homeowners are often eligible for tax breaks but are also responsible for the costs of maintenance and local taxes.
The National Association of Home Builders reported that the number of new housing starts in February was exceptionally low. Besides architects and general contractors, the professionals directly affected by a downward trend in new housing include electricians, roofers, brick masons, plumbers, carpenters and more.
"For each existing home purchased, almost $31,000 in direct and indirect spending occurs in the economy," says Walter Molony, senior public affairs specialist for the National Association of Realtors. "Besides the services directly tied to a home purchase, other sectors benefit from the demand for related goods and services, including carpeting, furniture, appliances, window treatments, landscaping, home improvement, etc. For a new home, the economic activity is even higher -- nearly $59,000."
Homeowner tax credits, which expired last year, discouraged sales and forced lower home prices; lowered home prices make housing more affordable but provide less profit for homeowners looking to sell. Texas, Oklahoma, Arkansas and the New England states have shown the most strength in home prices, according to the Republic Mortgage Insurance Co.'s Metropolitan Area Market Analysis. The job market is hardest in the Western states and better in the southeastern and central parts of the country. Urban areas are experiencing higher delinquency and foreclosure rates.
National Association of Realtors President Ron Phipps recently told members of Congress: "Homeownership is a pillar of our economy; our research suggests that home sales in this country generate more than 2.5 million private-sector jobs in an average year." Directly linking new home construction and existing home sales to the nation's economic recovery, Phipps stated that "owning a home contributes to the strength of the nation's economy and is still one of the best ways for individuals to build long-term wealth; therefore, we need public policies that support homeownership."
There is still room for guarded optimism in the housing market, even though sales of existing homes fell in February after three straight monthly increases. Recent advances by the government and lending companies have been investigated and established to aid homebuyers and strengthen the housing market. Major lender Wells Fargo & Co. lowered credit score requirements for Federal Housing Administration mortgages. U.S. leaders are looking toward modifications of the secondary mortgage market to enable homebuyers access to affordable mortgages.
Molony offers a positive perspective: "In total, housing and related economic activities account for 15 percent of gross domestic product. For every two new homes sold, a job is created. So though the recession hurt housing and sales have been recovering since a cyclical low last July, a pent-up demand is beginning to be unleashed as household formation returns to normal. Home sales are expected to increase 8 percent this year, with the growth in housing activity projected to create 150,000 to 200,000 jobs in 2011."