Homeownership and Wealth Accumulation/Destruction
The nature of “homeownership is the foundation of middle class wealth” has changed from accumulating wealth by paying off a mortgage to speculating in housing by taking on more debt.
Once upon a time people spent decades paying off their home mortgages. That reduction in debt to zero left them equity. Those who paid rent for 30 years may have had lower costs of living (no maintenance costs or property taxes) but unless they saved religiously then they did not end up with the equivalent wealth of a typical homeowner who paid off the mortgage.
Throughout the 1950s and 60s, homes prices and mortgage rates were remarkably stable. The idea that one’s house could double in value in a few years was as nonsensical as the price falling in half. Houses cost about two or three times’ average income, and over time they drifted higher (adjusted for the era’s low inflation) at about 1% a year.
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