THE WHITE HOUSE
Office of the Vice President
MAKING THE DREAM OF HOMEOWNERSHIP A REALITY: AMERICA HITS ALL-TIME HIGH HOMEOWNERSHIP RATE
October 23, 1997
In 1994, President Clinton, along with the National Partners in Homeownership, set a goal for the nation to achieve an all-time high homeownership rate by the year 2000. Today -- a full three years early -- the Census Bureau reported that in the third quarter of 1997 the homeownership rate climbed to its highest level ever. Here are some of the results from the Census report, as well as other housing-sector statistics:
Highest Homeownership Rate in American History. In the third quarter of 1997, the homeownership rate climbed to 66.0 percent from 65.7 percent in the second quarter. The homeownership rate is now at its highest level ever. The previous record high was 65.8 percent in the third quarter of 1980.
Largest Increase in Homeownership on Record. After falling from 65.6 percent in the first quarter of 1981 to 63.7 percent in the first quarter of 1993, homeownership is on the rise again. Since the first quarter of 1993, the homeownership rate has increased from 63.7 percent to 66.0 percent today -- that's the largest 4 1/2-year rise in homeownership on record.
5.8 Million New Homeowners Under Clinton-Gore Administration. Since the beginning of 1993, the number of homeowners has increased by 5.8 million. In the third quarter of 1997 alone, there were 462,000 new homeowners, and so far in 1997, there have been 1.3 million new homeowners.
Half a Million More African-American Homeowners. The National Partners in Homeownership is trying to increase housing opportunities for all Americans. Since established, there have been 523,000 more African-American homeowners. There is still work to be done: African-American homeownership rate is still far below that of all households (45.8 percent vs. 66.0 percent).
Nearly Half a Million More Hispanic Homeowners. Since the end of 1994, the number of Hispanic homeowners has increased by 463,000, but the Hispanic homeownership rate is still just two-thirds of the overall homeownership rate.
1.2 Million More Families Living in Cities Own a Home. Since the fourth quarter of 1994, the homeownership rate for families living in cities has increased from 48.2 percent to 50.2 percent -- that translates into 1.2 million more families living in cities who own their own home.
Record-High Home Sales. In August 1997, existing home sales were 16 percent higher than in January 1993 (4.3 million vs. 3.7 million at an annual rate) -- existing home sales are now at their highest level on record. [Source: National Association of Realtors]
Housing Starts Are Up 24 Percent Since 1993. Housing starts have increased from an annual rate of 1.2 million in January 1993 to 1.5 million in August 1997 -- that's an increase of 24 percent. [Source: Bureau of the Census.]
1.1 Million New Construction Jobs -- Faster Rate of Growth Than Any Administration Since Truman. After losing 667,000 jobs in construction during the previous four years, 1.1 million new construction jobs have been added since January 1993 -- that's a faster annual rate than any other Administration since Harry S Truman was President. [Source: Bureau of Labor Statistics, Current Employment Statistics survey.]
PRESIDENT CLINTON'S ECONOMIC STRATEGY HAS HELPED MAKE THE AMERICAN DREAMA REALITY FOR MILLIONS OF AMERICANS
In 1993, President Clinton put in place a three-part economic strategy: reduce the deficit, invest in the people, and open markets. Lower deficits helped lead to lower mortgage rates, more jobs, and higher family incomes, which -- along with the National Homeownership Strategy -- has led to more affordable homes and the highest homeownership in American history.
Homes More Affordable Under Clinton-Gore Administration. According to data from the National Association of Realtors, homes have been more affordable during the Clinton-Gore Administration than during any other Administration since Richard Nixon was President. [Source: Based on data from the National Association of Realtors]
Cut Deficit 87%. In 1992, the deficit was $290 billion -- a record dollar high. This year, the deficit is projected to fall to $37 billion -- the lowest deficit in 24 years. [Source: OMB]
Lowest Mortgage Rates in 30 Years. Experts -- such as Alan Greenspan, Business Week, and Fortune -- agree that the deficit reduction from the President's 1993 Economic Plan led to a drop in long-term interest rates. Mortgage rates have averaged just 7.8% under President Clinton -- lower than under President Reagan (12.8%), President Bush (9.5%), or any Administration since Lyndon Johnson was President. [Source: Department of Treasury, Office of Economic Policy.]
Lower Mortgage Rates Saved Families Thousands. According to the New York Times and Money magazine, lower interest rates under the Clinton-Gore Administration have saved the 10 million families who refinanced their home mortgages $1,000 to $2,000 per year, on average. [Source: New York Times, 8/3/96; Money, 8/96]
13.2 Million New Jobs. The home-building community looks to the job-formation rate in planning housing production levels. Under President Clinton and Vice-President Gore, the economy has added 13.2 million new jobs -- a faster annual rate of job growth (2.5 percent per year) than any Republican Administration since the Roaring 1920s. [Source: Bureau of Labor Statistics.]
Unemployment Down to 24-Year Low. In 1992, the unemployment rate was 7.5 percent. In September 1997, the unemployment rate was down to 4.9 percent -- as low as it's been in 24 years. [Source: Bureau of Labor Statistics.]
Typical Family Income Up $2,169 since 1993. Since President Clinton's Economic Plan passed in 1993, median family income has increased from $40,131 in 1993 to $42,300 in 1996 -- that's a $2,169 increase in income, adjusted for inflation. From 1988 to 1992, median family income fell $1,795, adjusted for inflation. [Source: Bureau of the Census.]
Consumer Confidence As High As It's Been In Nearly 30 Years. The Conference Board's measure of consumer confidence has more than doubled since President Clinton was elected. Consumer confidence is now as high as it's been since 1969. [Source: The Conference Board]
CLINTON-GORE ADMINISTRATION ACTIONS TO MAKE HOMEOWNERSHIP EASIER AND MORE AFFORDABLE
National Homeownership Strategy. In 1995, at the request of President Clinton, the Administration convened the National Partners in Homeownership to carry out a National Homeownership Strategy. The Partnership, an unprecedented public-private effort, consists of 65 leading national organizations and 131 local partnerships. All of the key leaders in housing are a part of this partnership. These Partners have made significant strides in working together to increase housing production, reduce regulatory barriers, and expand homeownership opportunities for all Americans. A National Homeownership Summit attended by President Clinton attracted 1,400 people in June 1996; the Partnership launched a National Homeownership Week in June 1997; and this past year more than 600 events, such as homebuyer fairs, took place across the country.
Lowered Closing Costs By $1,200 for Qualified First-Time Home Buyers. The Clinton Administration has cut FHA home mortgage insurance premiums four times. One reduction, applying to all first-time homebuyers with FHA-insured mortgages, will save homebuyers $200 in closing costs on the average FHA mortgage of $85,000. Another will save first-time homebuyers in central cities an additional $200. In all, cuts approved by President Clinton have cut average FHA closing costs for first-time homebuyers by $1,200 around the country and will cut closing costs by $1,400 in central cities. Last year, FHA provided financing for 800,000 homeowners, many of whom were first-time homebuyers -- and many of these families would not be homeowners if it were not for the actions taken by the Clinton Administration.
Making It Easier to Qualify for Mortgage Loans. The FHA has eliminated unnecessary and overly strict requirements under its loan program that made it difficult for many families to qualify for mortgage loans. It has also given lenders greater flexibility to make homeownership possible for more nontraditional borrowers, and has clarified certain underwriting requirements so they are not applied in a discriminatory manner. With these improvements, thousands more families are eligible for FHA-insured home loans. It also streamlined its underwriting criteria, consolidated operations, and improved its performance. The cost savings from these improvements have resulted in cost savings to consumers.
Penalty-Free IRA Withdrawals for the Purchase of a First Home. The Balanced Budget Act signed into law by President Clinton in August 1997 expands Individual Retirement Accounts (IRAs) to allow penalty-free withdrawals for first-time home purchases.
Capital Gains Exclusion for Homeowners. The tax cut President Clinton signed into law allows couples to exclude from tax up to $500,000 in capital gains from the sale of a home. (Single taxpayers could exclude up to $250,000.) This tax cut for homeowners exempts over 99 percent of home sales from the capital-gains tax, dramatically simplifying taxes, and record keeping for more than 60 million homeowners.
Streamlined HOME Program to Help Home Buyers. HUD has streamlined the HOME Program, helping an additional 23,000 families become home owners in 1996 alone. The HOME program allocates funds to local jurisdictions and is an important resource for potential first-time home buyers who may need down-payment assistance or help carrying the full cost of a mortgage.
First-Time Homebuyer Tax Credit in Washington, DC. The Balanced Budget agreement President Clinton signed into law in August 1997 included a $5,000 tax credit for first-time homebuyers in the District of Columbia.
Helping Localities Convert Abandoned Properties into Homes for Low-Income Families. HUD redesigned its Single Family Home Sales program to allow pre-approved nonprofit organizations and government entities to purchase abandoned HUD-owned properties at discounted prices. Since the program was created in 1993, more than 6,200 properties have been sold to non-profits and localities.
Reinventing HUD and the FHA. The FHA has automated its functions, using new technology and streamlining to serve lenders and home owners more efficiently. Staff savings from this process have already exceeded $2.4 million, allowing HUD to function more efficiently with lower costs. The FHA has also cut from 6-8 weeks to a matter of hours, the length of time it takes to issue mortgage insurance.
Officer Next Door. In June 1997, the Clinton-Gore Administration established the Officer Next Door program to stabilize communities and create safe neighborhoods. This program will enable 2,000 police officers to buy HUD-owned inner-city homes at half price.
Homeownership Zones. The Clinton-Gore Administration has sponsored important initiatives to revitalize urban neighborhoods and empower residents. In April 1997, HUD announced that the Homeownership Zone Program will provide $90.8 million in grants and loan guarantees to six cities. The assistance will help about 2,000 families become owners of newly built or rehabilitated single-family homes, while attracting new businesses.
Revised Community Reinvestment Act To Emphasize Results, Instead of Paperwork. The gains under the revised Community Reinvestment Act (CRA) have been substantial. Since 1993, new commitments for low- and moderate-income loans totaling more than $175 billion -- more than 80 percent of the total loan commitment under CRA since the law was enacted in 1977. Between 1993 and 1996 mortgage originations for Hispanic Americans and African-Americans increased 56 percent and 55 percent, respectively -- more than three times the 14 percent increase for white borrowers. Since 1993, home loans in low- and moderate-income geographies increased 33 percent, while gaining only 21 percent in upper-income geographies.
Instituted Fair Lending Initiatives. The Department of Housing and Urban Development signed 141 "Fair Housing Best Practices" agreements with real estate industry leaders such as mortgage bankers and realtors. In these agreements, the industry leaders pledge to exceed their responsibilities under the Fair Housing Act. Moreover, HUD implemented goals for Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs). Between 1993 and 1996, Fannie Mae and Freddie Mac purchased over one million mortgage made to low- and moderate-income homebuyers. Close to 450,000 of the GSE loan purchases were for first-time homebuyers.
Empowerment Vouchers. The Administration has proposed allowing working families who receive rental vouchers from HUD under the Section 8 Program to convert rental vouchers into Empowerment Vouchers that will enable them to buy a home under legislation expected to become law. Freddie Mac has announced a commitment to purchase up to 2,000 of the mortgages originated by private lenders.