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People who own their own homes experience many benefits that renters don't. Numerous studies have shown that homeowners are more likely to be involved in their communities, build wealth, and increase their educational level. Owners of homes are also less likely to be involved in crime or to depend on public assistance. Simply the stability offered by living in one place, and taking pride in the ownership of one's home, can boost the standard of living. The problem has always been how to make homes affordable to those in greatest need of those benefits.

The wealthy know that a homes' value will increase over time, and can reduce their taxable income. But there is a huge racial and socioeconomic gap that has been slow to change. The number of minorities who own homes has increased slowly over the past few years. Yet 76% of whites owned homes in 2006, compared with 48.2% of African Americans, and 49.5% of Hispanics. Homes are simply not in reach of a large part of this population. In California in 2007, the average monthly payment of new homes sold to first time buyers was over $3,000.

What's the Goal?

These numbers are what prompted President Bush to proclaim this past June National Homeownership Month. He announced a goal of increasing the number of minority owners of homes to 5.5 million by 2010. This will be challenging. Despite the current buyer's market, the cost of starter homes is continuing to rise at a time when lending standards have tightened significantly.

The tighter standards are a result of both the US Congress and the National Association of Realtors pushing for stricter regulations on the lending industry. An increase in foreclosed homes in both 2006 and 2007 is attributed to lenders approving loans to applicants who clearly did not have the means to support them. In addition, the Mortgage Bankers Association reports that up to $1.5 trillion in adjustable rate mortgages will experience increases in their rates this year. While many borrowers will simply refinance on their homes, the tighter regulations mean that many of those who want to refinance won't be able to. Some will face foreclosure of their homes.

What's the Plan?

In addition to tighter lending guidelines to protect consumers from losing their homes, other measures are needed. Freddie Mac and Fannie Mae, both government sponsored mortgage groups, will purchase some outstanding sub-prime loans in order to help homeowners refinance and keep their homes. The Federal Reserve is currently holding interest rates steady. This makes conventional mortgages more appealing. Finally, there are many government-sponsored programs to help minority groups buy their first homes. Ultimately, the ability of the lower economic sector of Americans to buy their first homes will impact the rest of the real estate market.