Can anyone own a home anymore?

Sam Jammal
Sep 7, 2017 · 6 min read

We all can picture the image — a white picket fence, nice green lawn and a two-car garage. Owning a home is a defining feature of making it in America. It’s what we all aspire to have.

Today, for an entire generation, this part of the American Dream is slipping away. Millennials — those born between 1982 and 2004 — lag behind in home ownership compared to previous generations. A recent Harvard study found millennial home ownership hit a historic low of 31% in 2015.[1]

There are a number of factors behind the decrease in millennial home ownership — student debt, delayed job market entry, etc. — but it’s not just millennials seeing a decrease in home ownership. Across the board, the nation’s home ownership rate for all ages fell to 62.9%, the lowest in 50 years. In California, where there is a severe housing shortage, home ownership rates lag even further behind at 54.6% — the 3rd lowest rate since World War II.

In Orange County, according to a study by the Association of California Realtors, you needed to make $157,950 a year to own a median-priced home this past summer.[2] The median sale price in Orange County in July was $785,000. As noted by the Orange County Register, the county’s minimum home buying income is almost twice the $83,450 annual income threshold that the 2017 U.S. Housing and Urban Development guidelines categorizes as low-income for a family of four.[3] Los Angeles County fares better with a minimum qualifying income of $103,070 and a median sale price of $566,240.

When you consider that the median income in California’s 39th Congressional District is $81,183, buying a home is out of reach for a large percentage of families in our community. But it’s no longer just purchasing a home that is pricing out families — rent is also too high. For six straight years, rent has increased in Southern California.[4] In Orange County, the average rent for a vacant unit is $1,799. In Los Angeles County, average rent is $1,775. With so few of us are getting raises at work, you have to wonder, “How does anyone — homeowner or renter — get by?”

With numbers like these, it’s no surprise the U.S. Census reports that 38% of those between 18–34 live with their parents. I love my parents and moved home myself in 2015 when I first moved back from DC, but this isn’t how our economy is supposed to work. The American Dream — or even just a taste of it — has become unaffordable.

While some will try to cast this aside as a generational issue, our housing crisis is a drag on our overall economy that must be addressed. According to the McKinsey Global Institute, $53 billion is lost in consumption spending because of housing costs.[5] This means people are tightening their belts and not spending at our restaurants and small businesses.

Photo by Richard Horne on Unsplash

The reality is that there is no short-term fix or single solution. While much of this will require leadership from state and local government to balance development with congestion concerns and the preservation of a community’s character, there is a federal role.

My foremost federal role will be to use my convening power as a Member of Congress to bring together our community to discuss issues like the cost of housing and homelessness and identify federal resources that combined with local and state solutions will help address these issues. It’s also to make sure our community is heard. Too often — whether it’s regarding Coyote Hills in Fullerton or Tres Hermanos in Diamond Bar and Chino Hills — the voice of our community is being ignored at the expense of developers. I will use my platform to raise community voices.

I will also work to improve federal policy. Reversing the decline in home ownership starts with reversing Trump’s tax reform. In our district, thousands of families will see a tax increase as a result of changes to the mortgage interest deduction last year. We must restore the previous deduction level to prevent penalizing home ownership. Given our high housing costs, more families are reliant on this deduction than in any other state.

We also should look at tax reform as an opportunity to create incentives for first and second time home buying. For a lot of families, their “starter home” has become their permanent home because the jump is too steep to the next level of housing. The growth of the housing market is limited by the lack of upward mobility that we have seen years past. It makes sense to encourage home buyers to upgrade as well empty nesters to explore additional options — which is virtually impossible when their mortgage payments are significantly lower than the cost of an apartment.

Lastly, we must continue to expand the Low-Income Housing Tax Credit, which is responsible for millions of affordable housing units across the country. Affordable housing is essential for building communities and this credit has a record of success. We can’t solve our homeless crisis without real investments in affordable housing. Even more problematic, too many Americans are working full-time and unable to afford housing. We have families on the brink of homelessness due to rising housing costs.

In addition to making sure our tax code focuses on preserving and encouraging home ownership, we need to invest in infrastructure. Congress has consistently passed the buck on improving our roads and bridges. Anyone who spends a morning or afternoon on the 91 or 57 freeways experiences firsthand our need to upgrade our infrastructure. When thinking about infrastructure, we shouldn’t just limit ourselves to making sure our roads are paved (though critical given the poor conditions in Northern Orange County especially). We also need to invest in public transportation to reduce congestion and identify how we will avoid adding more congestion as a result of new development. Livability and sustainability must be a part of the equation as we try to address the housing shortage. We cannot just build and expect communities to absorb the new congestion without a plan.

Finally, we must have a viable home building industry. Part of the problem we face is that supply is not meeting demand. Data by the U.S. Census Bureau shows that the number of home building companies shrunk between 2007 to 2012 by 50%.[7] This is a problem because even if the state issued housing bonds or the federal government doubled down on infrastructure, we may not have the workers to do the job. We can address this, in part, by making sure these small businesses have access to capital so they can scale to meet demand. Revitalizing the home building industry also requires having a workable immigration system because so much of our construction industry relies on an immigrant workforce.

One day — hopefully in the near future — I would like to be a homeowner. Home ownership was a part of my family’s American story. As working class immigrants, my parents were able to purchase a home on the border of Los Angeles and Orange County on salaries that could barely afford rent these days. Our home provided my parents the financial flexibility to support my education. We can’t allow the next generation to be a renters-only generation. We need new ideas and outside the box thinking to make sure that the American Dream is still a possibility.

These are some of the approaches I would have our federal government take to address this issue, but I want to hear your ideas on how we can solve our housing crisis. Email me at sam@sam4congress.com.

[1] http://www.jchs.harvard.edu/research/improving-americas-housing

[2] http://www.car.org/marketdata/data/haitraditional/

[3] http://www.ocregister.com/2017/05/15/income-needed-to-afford-an-orange-county-house-now-at-154120-a-year/

[4] http://www.ocregister.com/2017/02/09/average-asking-rent-hits-1800-a-month-in-orange-county/

[5] http://www.mckinsey.com/global-themes/urbanization/closing-californias-housing-gap

[6] http://www.latimes.com/business/la-fi-mortgage-tax-deduction-20170828-htmlstory.html

[7] http://eyeonhousing.org/2015/09/us-government-number-of-builders-declined-50-between-2007-and-2012/

Sam Jammal

Written by

Sam is an attorney, entrepreneur and public policy advocate. He previously served in the Obama Administration and ran for Congress in CA's 39th district.

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