Home, Sweet Home
Nevertheless, people don't sell their homes as quickly as they do stocks, making any kind of sharp drop much less likely--especially given the tax advantages of homeownership and the continuation of remarkably low long-term interest rates. Furthermore, the good job and income growth we now have should support the current market. And there are all those between the ages of 30 and 44, who represent the prime market for new homes, particularly for second homes bought with an eye toward investment and retirement. And don't forget our unprecedented wave of immigration. That accounted for more than a third of our household formation in the past decade and explains the fact that 40 percent of new homeowners during the same period were minorities.
What we're seeing today is a re-enactment of a historic American homeowning tradition. Of course, homeowners who count on increasing their equity stake have to calculate that they need five years of residency at least before their mortgage payments can get past the point where they are mostly for interest. But that's very similar to the traditional period for building an equity stake in most investments.
When America expanded from its coastal fringe, the government encouraged settlement by offering 160 acres that a homesteader could purchase by working the land for five years. It was the single most important stimulus for building a new nation of property owners. Today, homeownership has become the single most important element in the widest participation in an era of rising wealth. This is an ownership society for real.
advertisement
