A Little History On Home Ownership In America

The United States was formerly a nation of renters. Most people rented an apartment or row house in cities and very few lived in homes of their own. Those who were fortunate enough to have a home either had a farm house that they had built themselves; or a house in a town where they prospered as a merchant or in some other capacity. Homes often stayed “in the family” and were handed down for generations.

In those days people didn’t buy homes, because it was very difficult to get a mortgage. We don’t think that a mortgage is a big deal now, but back in the day it was considered a “debt.” It is still a debt, but people’s perception of being in debt has changed in the past 50 years. Today, we are used to buying things on credit. We are used to having a mortgage if we want a house. Fifty years ago, you had to have 50 percent down on a house before you could consider getting a mortgage. Then the bank would want extensive documentation.

Buildings and Loans, as seen in the film “It’s A Wonderful Life” were not banks. They were the predecessors of Savings and Loans that were pretty much eliminated in the 1980s by scandals and the fact that they could not compete with mortgage lenders. A building and loan used to use the money of the depositors strictly to build homes for other depositors. The home owners would then have a mortgage and pay on their mortgage monthly, with interest. The interest would then be distributed to the depositors. It was a concept of neighbors helping neighbors. The building and loan would also build the homes as well. This entire concept got convoluted since its inception and thus was the end of the Savings and Loans.

We gradually began owning our own homes thanks to the GI Bill that helped veterans of WWII. You can still see GI Bill houses today. They are usually small homes that were built by developers and purchased by vets who took advantage of this program. Gradually, subdivisions started going up all over the place and people began getting mortgages to buy homes. Somewhere along the line in the last 60 years, people decided that it made more sense to pay their mortgage instead of someone else’s mortgage.

And if you are renting, that’s what you are doing, paying someone else’s mortgage. There are many reasons why people rent, but only two make sense:

1. You are not planning on being in the area for more than a year or two at the most;

2. You have just moved to a new area and are not sure where to buy

Find out more about why buying a home beats renting in any real estate market.  Call me for more information. David Mueller and Associates, Ann Arbor Realtors 734-677-6699.

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