Owning a home has long been a key part of the American Dream.
But over the last decade, we have seen the homeownership rate in the U.S. decline to 63.4% – a fifty-year low. Most people would expect that, with the federal government’s stated commitment to homeownership, our country would rank at the top of national rankings in homeownership levels. Unfortunately, we stand a distant 38th in the world, behind countries such as Russia (84%), China (90%), Mexico (80%), Canada (68%), and most of the European Union. Why is this? What’s not working? While many economists and pundits have offered their opinions, we believe the root of our weakening homeownership rate has to do with how homes are acquired and held. Simply, homes are not purchased, they are financed. And the method of finance, the overuse of debt, has created challenges for potential homebuyers and increased financial risk for homeowners. Mortgage debt generally represents 87% of the funds used to purchase a home, and has been the only way, via home equity loans and reverse mortgages, to monetize existing home equity for homeowners. We believe that this methodology has to change and so, we are delivering the needed solution in the form of additional equity funds for home financing.