As the debate surrounding what to do with Fannie Mae and Freddie Mac rages on, The Motley Fool looks at homeownership in the U.S. and compares with to other countries -- where the results may surprise you.
The United States
To begin, let's start here in the U.S., where the rate of homeownership has fallen for the ninth straight year, to 65% in the second quarter of 2013. That's the lowest rate since 1996.
Although homeownership is down from the artificially high peak we saw in 2004 before the housing bubble burst, we still remain well above the levels for the most of the 40 years before the bubble. Yet surprisingly, in the face of higher homeownership, fewer people consider it an important indicator of class status.
An August 2012 Pew Research Study noted: "[H]omeownership is a marker of a middle-class lifestyle that has significantly dropped in importance over the past two decades. In 1991, 70% of adults said owning a home was important to being in the middle class; today, just 45% feel this way." Instead of viewing homeownership as the the most crucial factor in their lives, the study said, "Americans believe that having a secure job is by far the most important requirement for being in the middle class, easily trumping homeownership and a college education."
While the conversation continues in Washington about what to do with Fannie and Freddie -- two government-sponsored entities that help prop up the housing market by guaranteeing and buying mortgages from banks -- many want to see them no longer having a hand in the mortgage market at all.
In June, we saw a bipartisan effort from Sen. Bob Corker (R-Tenn.) and Sen. Mark Warner (D-Va.), who introduced a bill to replace Fannie and Freddie with "with a modernized system that preserves market liquidity and protects taxpayers from future economic downturns." While no conclusion has been made, a recent release from Corker noted there is "growing momentum for housing finance reform."
Despite the fall from thosd bubble-era highs, a 65% homeownership rate is still a rather remarkable statistic, according to data from Pew. Yet there are 33 countries that outpace the United States in this respect. A study from the Organisation for Economic Co-operation and Development highlighted that an international increase in homeownership can be primarily attributed to better tax policies, lower down-payment minimums, and financial-market interventions -- all of which encourage buying homes.
However, the study did note that improved homeownership numbers aren't always the best thing, as owning a home can often constrain workers' mobility, and if homeownership increases because of relaxed credit standards, there is almost always a boom and corresponding bust.
Furthermore, it's evident that the U.S. has room for improvement when it comes to homeownership, as a few of the countries that beat the United States will surprise you. Take a closer look.
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