(The Root) — Yesterday in Phoenix, President Obama delivered a major speech on his solutions for addressing America’s housing crisis in his second term. In addition to announcing plans to target Fannie Mae and Freddie Mac, he summarized his primary solutions as follows: “Helping more Americans refinance. Helping qualified families get a mortgage. Reforming our immigration system. Rebuilding the hardest-hit communities. Making sure folks have a decent place to rent.”
But one question his speech left unanswered is whether or not one key solution is being overlooked: Should we encourage fewer Americans to pursue the dream of homeownership?
President Obama and his advisers have made it clear that they still consider homeownership a significant component of the American dream. The Los Angeles Times quoted a senior administration official as saying, “Housing and homeownership are one of the cornerstones of the middle class,” and in his speech the president cited “a home to call your own” as one of “the cornerstones of what it means to be middle class in America.” But homeownership, and ultimately foreclosure, has played a large role in setting much of black America back financially in recent years.
According to the Pew Research Center, “In percentage terms, the bursting of the housing market bubble in 2006 and the recession that followed from late 2007 to mid-2009 took a far greater toll on the wealth of minorities than whites.” Pew also noted that “These lopsided wealth ratios are the largest since the government began publishing such data a quarter century ago.”
So if much of black America’s wealth was wiped out when the housing bubble burst, is it possible that it is time to reconsider defining the black American dream primarily through the lens of homeownership?
Time magazine explored the question of whether or not homeownership remains a worthwhile investment in the American dream in an article titled “A Nation of Renters.” The article noted that “housing economist Robert Shiller has pointed out time and again, in the long run, real estate just isn’t that great an investment.”
“I still do believe, as do most Americans, homeownership is an integral part of the American dream and is worthy to be pursued,” said financial adviser Lynnette Khalfani-Cox. The author of Your First Home: The Smart Way to Get it and Keep it, Khalfani-Cox cautioned that while a worthy pursuit, homeownership should be evaluated with the same cautious eye that more Americans are now using to reconsider the cost of a college education.
“The vast majority of people who are homeowners, especially African-American homeowners, have to borrow to purchase a home. So the dream is still there, but it is battered and bruised.”
Khalfani-Cox, who is the founder of AskTheMoneyCoach.com, also highlighted something that the president touched upon in his speech, which is responsible homeownership. “There are rights and responsibilities that go along with homeownership,” she said. “It is ill-advised and foolish to enter into homeownership until you are adequately prepared for it.”