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Housing Owning a home is a key means of building wealth in the United States, 1 and stable housing can help middle-class families access important opportunities, such as good health and education, that contribute to economic stability. 2 Across the country, however, both middle-class and aspiring middle-class families are unable to find stable, affordable housing. Homeownership—a staple of middleclass economic security—remains out of reach for many households, and the broader housing recovery since the subprime housing meltdown in 2006 and subsequent collapse of U.S. home prices has left behind many communities that remain mired in negative equity. At the same time, renters across the income spectrum face increasing costs. The homeownership rate for the United States has fallen over the past decade, and almost every age group shows lower rates of homeownership in 2015 compared to 1994. 3 While Baby Boomers—those born between 1946 and 1964—have now entered age groups with relatively higher homeownership rates, those under age 45 have homeownership rates much lower than the national rate of 63.5 percent. 4 These low rates are not due to families forgoing homeownership in favor of more affordable options: Owning a home is cheaper than renting in almost 60 percent of housing markets across the country. 5 Rather, stagnant incomes, rising home prices in some markets, and an extremely tight credit market are restricting families’ access to homeownership. Saving for a down payment remains an obstacle for families seeking to own a home. In July 2016, the average down payment made on a home purchase was 14 percent. 6 A Center for American Progress analysis estimates that it takes a typical household about 15 years to save for a 14 percent down payment. 7 112 Center for American Progress | Raising Wages and Rebuilding Wealth
FIGURE 6.1 Homeownership rate 75% 70% 65% First quarter 2005 69.2% First quarter 2016 63.5% 60% 1995 2000 2005 2010 2015 Source: Bureau of the Census, "Current Population Survey/Housing Vacancy Survey, Series H-111," Quarterly Seasonally Adjusted Homeownership, available at http://www.census.gov/housing/hvs/data/histtabs.html (last accessed June 2016). Alongside the challenge of saving for a down payment, many creditworthy people face excessively high standards for obtaining a mortgage. The Urban Institute found that tight credit standards led to 5.2 million “missing mortgages” between 2009 and 2014. Not only were credit standards stricter in 2014 than they were in 2005—when the housing bubble was at its peak— they were also stricter than in 2001, well before the housing crisis. Had standards been at the reasonable 2001 level, millions of creditworthy people would have been able to obtain a mortgage. 8 An excessively tight credit market has dampened the housing recovery and prevented creditworthy borrowers from being able to purchase a home—an important means for building wealth. 9 While some parts of the country are experiencing a strong housing recovery, many neighborhoods have yet to fully recover from the housing crisis, which drained the wealth of middle-class and lower-income households. 10 The instability of these neighborhoods leaves households struggling and inhibits the size and strength of today’s middle class. In the fourth quarter of 2015, more than 6 million homeowners were still underwater, mired in negative equity—meaning that they owed more on their mortgage than the market value of their home. 11 Moreover, negative equity rates either did not improve or got worse in about 1,000 counties across the country between 2011 and 2015. 12 (see Figure 6.2) Housing | www.americanprogress.org 113
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AGENCY/PHOTOGRAPHER Raising Wages a
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Contents 1 Introduction and summary
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CHAPTER 1 Introduction and summary
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Nevertheless, public policy can and
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of growth came to an end. Middle-cl
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The main reason middle-class income
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The above analysis of incomes focus
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TABLE 1.2 Wealth across demographic
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FIGURE 1.6 The cost of education, h
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Policy response and recommendations
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• Address the labor market effect
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Health care • Address cost shifti
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Endnotes 1 Authors’ analysis of M
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Introduction and summary | www.amer
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CHAPTER 2 Jobs and Wages By Michael
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One of the most striking aspects of
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In sum, these five factors leave ma
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ments to open production sites in l
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The deterioration of other regulato
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ate returned to its 2001 level. The
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This speaks to a larger challenge t
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Underinvestment produces chronic ro
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sidized jobs program that would hel
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Restore worker bargaining power We
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Rebuild labor standards and the bro
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Additional steps should also be tak
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Policymakers should work with stake
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At the same time, we can take actio
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Endnotes 1 Authors’ analysis of C
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52 Charles Whalen and Felix Reichli
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96 Julia Gordon, “Inequality, Opp
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prehensive immigration reform. Pass
Page 67 and 68: An Immigration Policy that Works fo
Page 69 and 70: CHAPTER 3 Early Childhood By Katie
Page 71 and 72: Due to these high costs, parents ar
Page 73 and 74: information available to parents. 2
Page 75 and 76: Policy recommendations Two new poli
Page 77 and 78: Endnotes 1 Annie E. Casey Foundatio
Page 79 and 80: Early Childhood | www.americanprogr
Page 81 and 82: CHAPTER 4 Higher Education By Ben M
Page 83 and 84: FIGURE 4.1 Average tuition and requ
Page 85 and 86: FIGURE 4.3 Net price of public four
Page 87 and 88: Policy recommendations Increasing h
Page 89 and 90: Endnotes 1 Bureau of Labor Statisti
Page 91 and 92: for the same home. 9 Furthermore, t
Page 93 and 94: LGBT People Face Significant Barrie
Page 95 and 96: CHAPTER 5 Health Care By Maura Cals
Page 97 and 98: Health care benefits are part of a
Page 99 and 100: When combined, these trends meant t
Page 101 and 102: Policy recommendations The ACA made
Page 103 and 104: The notice should outline how much
Page 105 and 106: Require drug companies to justify p
Page 107 and 108: Endnotes 1 Mark W. Stanton, “Empl
Page 109 and 110: Health Care | www.americanprogress.
Page 111 and 112: Workers with disabilities are also
Page 113 and 114: with disabilities, child care provi
Page 115 and 116: 23 Faye Ong, ed., Inclusion Works!
Page 117: CHAPTER 6 Housing By Sarah Edelman
Page 121 and 122: middle-class households: The share
Page 123 and 124: Homebuyers in the coming decade may
Page 125 and 126: Support and expand low down payment
Page 127 and 128: Changes such as these have faced pu
Page 129 and 130: for lots and rules against construc
Page 131 and 132: 20 Ibid. 21 Joint Center for Housin
Page 133 and 134: 63 CAP published a report in Decemb
Page 135 and 136: African American and Latino workers
Page 137 and 138: Endnotes 1 Due to a lack of disaggr
Page 139 and 140: CHAPTER 7 Retirement By David Madla
Page 141 and 142: FIGURE 7.1 Households are not build
Page 143 and 144: FIGURE 7.3 Middle class households
Page 145 and 146: The federal government plays a larg
Page 147 and 148: Modernize survivorship and divorce
Page 149 and 150: Fully implement the conflict of int
Page 151 and 152: 27 Christian E. Weller and David Ma
Page 153 and 154: Retirement | www.americanprogress.o
Page 155 and 156: CHAPTER 8 Conclusion By Brendan Duk
Page 157 and 158: The country will elect a new presid
Page 159 and 160: Conclusion | www.americanprogress.o
Page 161 and 162: Thomas Huelskoetter is the Research
Page 163 and 164: Acknowledgements The authors would
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