Who Aspires to Be a Renter?

Bob Hunt
By Bob Hunt
C.A.R. Director

While there is nothing wrong with renting, it isn’t what people aspire to. It isn’t part of the American Dream.

Five years ago, in May 2012, some 13,000 REALTORS® visited Washington, D.C. At that time, credit had been tightened in the wake of the housing market crash. As a result, the homeownership rate had dropped to 62 percent, the lowest in a decade; and the number of first-time home buyers had declined from 50 percent in 2010 to 37 percent in 2011. REALTORS® from across the country descended on the nation’s capital to deliver a message: Home Ownership Matters.

Today, according to the U.S. Census Bureau, the homeownership rate increased to 63.7 percent in the fourth quarter of 2016, a figure that is better than that for 2011 but is still below the fifty-year average of 65.28 percent. (For reference, the all-time high was 69.2 percent, reached in the second quarter of 2004; and the record low was 62.9 percent, which occurred in the second quarter of 1965.)

But the number of first-time buyers has dropped. According to the 2016 Profile of Home Buyers and Sellers published by the National Association of REALTORS® (NAR), in 2015, first-time buyers constituted just 35 percent of the market. Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, North Carolina, explains that “home prices are rising so much faster than incomes, so it’s hard for buyers to save for a down payment.”

Rising rents are also part of the problem. Throughout much of the country, rents have risen steadily since 2011, taking an increasingly larger bite out of household budgets and making it even more difficult for renters to save.

Despite these obstacles, in 2015, NAR’s new Housing Opportunities and Market Experiences (HOME) survey found that 94 percent of young renters wanted to buy. Among renters overall, 83 percent wanted to own, and 77 percent believed that home ownership was part of their American Dream. According to a Gallup poll taken in late 2016, congressional approval ratings were up from the dismal 14 percent (mentioned by Democrat strategist and pollster Celinda Lake in 2012) to around 17 percent, but still lagged far behind the strong sentiment favoring home ownership.

We are reprinting Bob Hunt’s column titled “Who Aspires to Be a Renter?” which was published on page 49 in the July 2012 issue of the OC REALTOR® and then reprinted on pages 18–19 of the January 2013 issue, because we firmly believe that Home Ownership Matters, because many of the obstacles to home ownership that plagued the housing market in 2012 still exist today, and because we want to encourage government agencies and elected officials to enact laws and implement policies and practices that will help a greater percentage of U.S. residents realize their American Dream.

“No one aspires to be a renter,” proclaimed the speaker at the 2012 “Rally to Protect the American Dream,” a gathering of more than 13,000 REALTORS® at the Washington Monument. Gerardo Ascencio, president of the National Association of Hispanic Real Estate Professionals, went on to tell of his immigrant parents who brought him to America and who worked two jobs (each) so that they could move to nicer neighborhoods and a more comfortable home. He recounted that owning a home came late in life for his parents, later than had actually been possible. They didn’t buy as early as they could have because they didn’t understand how the whole process worked. (Example: His father thought that when you finally finished paying the mortgage, the bank got the home back.)

Ascencio was speaking to REALTORS®, reminding them of the important work that they do day in and day out: helping people and showing them how they, too, can come to realize a part of the American Dream. The rally, on May 17, was the culmination of legislative advocacy efforts, during which literally thousands of REALTORS® walked the halls of Congress, keeping longstanding appointments with their representatives. They were there to urge support for a variety of measures designed to strengthen the still-fragile housing market and to provide a stable financing system that will ensure access to credit for the millions of “echo boomers” who will be the entrylevel buyers of the coming years.

Again and again, REALTORS® expressed their concerns that the pendulum of reform has swung too far.

No one argues that reform has not been needed. Everyone agrees that loose credit standards and irresponsible— not to mention illegal—lending practices led to a devastating crisis in the housing market, one whose effects continue today. No one disagrees that thousands of people bought homes—many of them first homes—for which, financially, they were not remotely qualified. Corrections were certainly needed.

But now we are seeing the effects of overcorrection. According to Gallup, the homeownership rate has dropped to 62 percent, the lowest in a decade. Moreover, the number of first-time home buyers has dropped precipitously, from 50 percent in 2010 to 37 percent in 2011. The Federal Housing Administration’s tightened regulations have disqualified a significant amount of the inventory normally available to first-time and low-end buyers. Moreover, conventional lending standards have tightened beyond reason. Federal Reserve Governor Elizabeth Duke told the REALTORS® that only one-half of lenders will lend to those who are on the low end of Fannie Mae or Freddie Mac eligibility, even if they have a 20 percent down payment. This, too, impacts entry-level buyers the most.

Added to all that, it has been noted, the Federal Housing Finance Agency’s bulk-sale REO-to-rental program has the effect of removing a significant portion of the inventory that would have been available to low-end and entry-level buyers. Nobody has said “conspiracy,” but the overall effect of these diverse trends points to a housing market much more conducive to renting than to buying. And too few in government seem to be upset about that. When confronted with complaints about the REO bulk-sale program, Mark Stegman, counselor to the Secretary of the Treasury for Housing, told the REALTORS® that there is nothing wrong with being a renter.

And, of course, no one said there was anything wrong with it. It just isn’t what people aspire to. It isn’t part of the Dream.

One of the more interesting speakers to address the REALTORS® was Democrat strategist and pollster Celinda Lake. Ms. Lake observed that “voters see home ownership as fundamental to the American Dream,” and they see that dream disappearing. Fifty-nine percent said that they think the next generation will be worse off. And what about the housing crisis? Seventy-four percent say that home ownership is worth the risks. Even 63 percent of those whose homes were underwater agreed with that. Sixty-eight percent of those who do not currently own a home, want to.

With congressional approval ratings hovering around 14 percent, Ms. Lake observed that the sentiment for home ownership far outweighs that for Congress. She encouraged the REALTORS® to take their proownership message to the Hill. They did. Enthusiastically.

Bob Hunt is a director of the California Association of REALTORS® and is the author of Real Estate the Ethical Way. His email address is