National Press Club Luncheon
Remarks as prepared for delivery by
"Homeownership: Myth vs. Reality"
Secretary Alphonso Jackson
Thursday, June 17, 2004
Thank you for that very kind introduction, Shelia. You've brought
great credit to the National Press Club as its President.
We've been joined today by representatives from nearly every sector
of the housing industry - from builders, to bankers, to buyers.
Thank you for coming. And thank you for working in such close partnership
with the Bush Administration to create affordable housing opportunities
for America's families.
I appreciate the National Press Club's invitation to address this
historic institution. Since 1932, speakers have been coming here
to take part in these weekly luncheons. You've sparked national
debate on most of the great issues of the day, and a lot of headlines
have been generated from this podium.
I'm glad to have this opportunity to talk about our work at HUD
and shine a light on our achievements. I want to focus specifically
on what we're doing to create more homeowners, because this is a
priority of mine, it's certainly one of the President's priorities,
and we have a great story to tell during National Homeownership
The phrase "American Dream" has been around since historian
James Adams coined it in 1931. He described it as a dream "in
which each man and each woman shall be able to attain to the fullest
stature of which they are innately capable, and be recognized by
others for what they are, regardless of the circumstances of birth
Adams gave it a name, but the idea of America as a land of unlimited
possibility and opportunity has been with us since this nation's
earliest days. Immigrants have been coming to our shores for nearly
400 years, searching for something better than the life they left
The wonderful thing about the American Dream is that the individual
defines it. It doesn't come with a government mandate or "how
to" manual. Your dream is going to be different from everyone
else's. You - and only you - are its architect, builder, landlord,
Many of these dreams have a common theme, however: the pursuit
At first, "ownership" meant land, and in America's early
days, a person's social status was measured by the acre. But today,
the pursuit is more often defined not by land itself, but by what
we build upon it. We don't aspire to be only landowners; we aspire
to be homeowners. Homeownership and the American Dream are tied
In the mid 1800s, miles of open land and the allure of gold drove
settlers west by the tens of thousands. Many found their motivation
in the Homestead Act of 1862, which promised free land to anybody
who agreed to plant it and build a home. These settlers stretched
the nation's borders and remade America. By the 1890s, nearly half
of all Americans owned a home.
When the Great Depression struck, a quarter of the workforce lost
their jobs. Homeownership slid. Banks failed. More than 40 percent
of all home mortgages were in default by 1933. Lawmakers in Washington
recognized that homeownership was vital to both families and the
national economy. They understood that not all people were as capable
of realizing the dream as others. And so the federal government
made a formal commitment to expanding the ranks of homeowners.
In a flurry of activity during the 1930s, Congress and the President
created the Federal Home Loan Bank System to encourage lenders to
make loans to homebuyers, the Federal Housing Administration and
FHA-insured mortgages, Fannie Mae, and public housing.
The G.I. Bill enacted during World War II stimulated homeownership
by offering government-backed mortgages to veterans. But soldiers
returning from the front - many of them newly married and looking
for a first home - found a housing shortage instead.
Washington responded with the Housing Act of 1949, which promised
"a decent home and suitable living environment for every American
family." The quality of housing improved. The quantity
of housing improved.
Not everyone shared in these advances, however. And so the struggle
for equality in housing opportunities prompted a new assessment
of the American Dream in the 1960s.
Minority and low-income citizens were being shut out. Oftentimes,
they didn't have the same opportunities as others to live in the
homes of their choice. Congress and the President responded with
a decade of federal action intended to preserve civil rights and
fairness in housing. The creation of the Department of Housing and
Urban Development in 1965 was a hallmark of the era.
Today, more than two-thirds of Americans live in homes they own.
Homeownership has come to symbolize the American Dream.
In fact, we have such a long tradition of homeownership in this
country that most people don't stop to question it. Why the continued
focus on homeownership? Rental housing in this country is affordable
and plentiful - why don't we promote rental housing with the same
enthusiasm we have for homeownership?
Rental housing has a very important place, and I'll say more about
that later. But the benefits of homeownership for families, their
communities, and for the nation are simply too profound to ignore.
Owning a home is the foundation of wealth creation for families
and is their quickest path to self-sufficiency. Last year, Americans
took $139 billion out of the equity they'd accumulated in their
houses and invested it in new businesses, consumer goods, their
children's educations, and so on.
Homeownership offers children a stable living environment that
influences their development in many positive ways. The children
of homeowners score an average of 9 percent higher in math and 7
percent higher in reading ability. They're 25 percent more likely
to graduate high school. They have a 116 percent better chance of
Homeownership also provides a source of tremendous strength for
the entire nation.
Over the past three years, the housing market has driven the national
economy, as Americans bought and refinanced homes in record numbers.
Many regions were spared the worst of the recent recession because
the local housing market was so strong.
Today, the housing sector directly accounts for about 14 percent
of the nation's total Gross Domestic Product and involves the efforts
of builders, bankers, mortgage lenders, realtors, and numerous others.
For every 1,000 single-family homes built, we see 2,500 jobs created,
$75 million in wages earned, and $37 million in tax revenues generated.
The robust housing market continues. As the government reported
just yesterday, housing starts remained strong in May, and building
permits for single-family construction rose to their highest annual
level since reporting began 44 years ago.
A nation of homeowners provides stability and strength, and because
we have focused so much attention throughout our history on creating
better housing, America today is the best-housed nation on earth.
A record number of Americans - nearly 69 percent of us - are homeowners.
For the first time ever, more than half of all minority households
own homes in their communities.
Despite that success, minorities still aren't sharing equally in
the homeownership dream. In fact, there's a "homeownership
gap" in this country, and minority families are far less likely
to own a home.
President Bush believes that homeownership should be accessible
to everyone. So he took a bold step two years ago and challenged
the nation to close the homeownership gap and create 5.5 million
new minority homeowners by the end of this decade.
I'm pleased to tell you that we're making tremendous progress.
Since the President issued his homeownership challenge, more than
1.5 million minority families have taken out a mortgage on a new
One of the homeownership myths I want to challenge this afternoon
is the idea that homeownership is unaffordable, especially for low-income
families and first-time buyers who have limited means and little
The reality is that owning a home is an affordable option for more
families than ever before. In many markets, a family can find a
home that requires a monthly mortgage no bigger than the amount
they now pay in rent. A buyer who takes time to research their options
and seek out information will find countless programs on the local
level dedicated to helping new consumers find a first home.
The Federal Housing Administration is celebrating its 70th anniversary
this month. Over the course of those 70 years, FHA has made it possible
for nearly 33 million families to join the ranks of the nation's
homeowners. And a person can't be denied an FHA-backed loan because
they make too much money. That's another homeownership myth. If
they meet the credit requirements, if they can afford the mortgage
payments, and if they plan to make the property their primary residence,
anyone can apply for an FHA-insured loan.
Suppose a person could afford a monthly mortgage payment, but hasn't
been able to save money for a downpayment. Is homeownership out
of reach for them?
The myth says yes. The reality says maybe not.
I announced recently that more than 400 state and local government
agencies will share $162 million in funding through the American
Dream Downpayment Initiative. These grant dollars will help first-time
homebuyers with their downpayment and closing costs, which researchers
tell us represent the single greatest obstacle to homeownership.
President Bush proposed the American Dream Downpayment Initiative
as a candidate for the White House in 2000, and made it the centerpiece
of his homeownership agenda once he took office. We worked with
Congress for three years to enact it.
Now that the funds are available, we can begin helping thousands
of families chart a course toward homeownership - families like
the Telore family of Boston.
Ramesh and Sheba Telore came to the city of Boston as immigrants
from India. Ramesh became a minister at the Emmanuel Gospel Center.
Sheba works as a secretary.
Sheba's great dream was to own a home, but the family couldn't
manage the finances, especially a downpayment. But they took a homebuyer
education course and finally had the opportunity last year to purchase
a three-bedroom home in the Mission Hills area. Working through
one of HUD's lending partners, they received $2,800 in downpayment
and closing cost assistance, which made the home affordable.
Today, they live in a brand-new house. "It's amazing,"
says Ramesh in describing the family's journey to homeownership.
"Our long-cherished dream has come true."
Let me tell you about another innovative plan we've developed to
help families jump the hurdle of high downpayments. The Administration
has proposed legislation called the Zero Down Payment Mortgage.
It would allow buyers to qualify for FHA loans without having to
come up with cash at the closing table. The downpayment would be
rolled into the total cost of the mortgage at a slightly higher
interest rate than a standard FHA loan.
We estimate that our proposal would generate 150,000 new homebuyers
in the first year alone.
The Zero Down plan has strong and bipartisan support in Congress.
The House Financial Services Committee recently approved it, and
we're hoping that President Bush will be able to sign it into law
First-time buyers sometimes think there's nobody out there to help
them navigate the process. They often don't know their rights as
homebuyers. They don't fully understand their responsibilities either.
But the reality is that homeownership education is available in
every large and medium-sized city in America. With the help of HUD-approved
counseling agencies, families are making more informed home purchases,
learning how to budget for home expenses and a regular mortgage
payment, and they're finding the lending process less intimidating.
Our Administration is significantly boosting funding for housing
education. The budget we've proposed for the coming year provides
a record $45 million to help more than a half-million homebuying
families with counseling services. We've more than doubled the funding
for housing education since 2001.
When I was with President Bush in suburban Philadelphia this spring,
we saw what housing counseling can do for a family that once considered
homeownership out of reach.
For almost four years, Pearl Cerdan had been thinking about buying
a home for herself and her six kids. The homebuying process always
scared her off, though, and she was worried that her credit rating
wasn't good enough to qualify her for a mortgage.
But Pearl heard about the services offered by a local counseling
agency and she began taking homeownership classes. She learned money-management
skills, too, and how to repair her damaged credit. The counseling
service helped her find low-interest financing. Soon she was signing
the papers that made her a first-time homebuyer.
On March 15th, Pearl greeted the President of the United States
at her front door. And it was with tremendous pride that she said,
"Welcome to my home."
We're taking many steps to help Americans become homeowners, and
we're working specifically to promote the production of affordable
We've been pressing Congress to enact what I believe will be our
most effective tool for spurring affordable housing production,
especially in areas where affordable homes are hard to find. I'm
talking about the Single-Family Affordable Housing Tax Credit.
The budget President Bush proposed in February would provide developers
with nearly $2.4 billion in tax credits to build new homes or rehabilitate
existing structures. We have two goals: to create homeownership
opportunities in distressed neighborhoods and to revitalize those
neighborhoods through increased homeownership.
Legislation to create the tax credit has been introduced in the
House and Senate. The bills have strong support from both sides
of the political aisle, including 277 cosponsors in the House. We're
hoping that Congress will enact the tax credit this year - it's
an opportunity to make homeownership a reality for 200,000 families
in communities where affordable homes are needed most.
There's no question that some communities face an acute shortage
of affordable housing. That's a reality. But there's no basis to
the myth that the solution to the problem rests entirely with the
It's no accident that many of the cities facing affordable housing
shortages also have the tightest restrictions on growth. Boston,
for example, is one of the most expensive housing markets in the
nation. According to a report published last year, a major cause
of the city's affordable housing shortage is what the study calls
"the almost impenetrable thicket of barriers formed by Massachusetts
state and local regulations."
Regulatory barriers on the local level end up delaying construction
and driving up costs. The barriers include out-of-date building
codes, approval processes that are duplicative and time-consuming,
restrictive zoning ordinances, unnecessary or excessive fees and
Removing these barriers is key to meeting the housing needs of
our nation's families. Experts estimate that if the barriers were
dismantled, development costs on average could drop as much as 35
percent. This would allow millions of Americans to buy or rent housing
they can't afford today.
In response, we created America's Affordable Communities Initiative.
Through it, we're working with communities and local organizations
to highlight these regulatory problems and the need for reform.
Perhaps most importantly, HUD is leading by example. We're reviewing
the Department's internal regulations, looking for barriers that
we've unintentionally created over the years. And when we find them,
we're dismantling them.
There's one final myth that I want to dismantle today. Given the
Administration's focus on homeownership, this one was probably inevitable,
and it goes something like this:
"By focusing so much attention on homeowners, you're ignoring
those who rent."
Let me say this in response. Since coming to HUD, I've spoken passionately
about the importance of increasing homeownership, especially among
minorities - and I make no apologies for it. Expanding the ranks
of the nation's homeowners will continue to be a priority for this
Administration because the benefits of homeownership are too numerous
Having said that, I know that we can't meet today's housing challenges
through homeownership alone. A growing need exists for affordable
rental housing, too.
I've devoted a large part of my career to helping families find
decent and affordable rental housing. I understand - from the success
stories I've seen first-hand - that rental housing can serve as
a bridge to self-sufficiency. So let me personally assure you that
on my watch, HUD will remain committed to meeting the needs of the
Today, HUD's rental assistance programs help 4.5 million households
nationwide. Three-quarters of our $30 billion budget is dedicated
to meeting the nation's rental housing needs, and that figure is
climbing, as rental assistance programs continue to consume more
and more dollars. For instance, Section 8 itself takes up over 50
percent of HUD's 2004 budget, compared to 36 percent just five years
In order to continue funding all of HUD's critically important
programs, we're looking for ways to improve Section 8. Whatever
action we take, I can assure you that HUD's commitment to its rental
families will remain strong.
America is not a perfect place, but there's perfection in her promise.
It's that promise that continues to inspire people like Calloway
Leffal. He turned 67 years old recently, and even though that's
an age when most people start slowing down, he chose to fulfill
a dream by becoming a first-time homebuyer in Dallas.
It inspires people like Carlos and Jane Arias. They came here as
immigrants from Peru. They spoke no English, had no credit history,
and knew nothing about the process of buying a home. Just 18 months
after arriving in this country, they became proud homeowners.
And it inspires people like Kim Berry of Central Islip, New York.
She's a Native American who was left without any kind of family
support system when she separated from her husband and got laid
off in the same year. But Kim was determined to buy a home. With
the help of HUD and an entire community support system she built
on her own, Kim lifted herself out of government-subsidized housing
and into her own home.
It's perhaps a testament to the continuing power of homeownership
that it has provoked so many myths over the years. I hope I've successfully
batted down a few of them this afternoon. But the American Dream
of homeownership itself is not a myth. From the suburbs to the inner
cities, the dream of homeownership endures, and it belongs to every
In a great country where people are different from one another
in so many ways, the American Dream is one of the strongest ties
we share with one another. North to south, east to west, across
all lines of ethnicity, color, religion, and gender, people share
in the aspiration to own a home.
America has good reason to make homeownership accessible and available
to everyone who seeks it. And good reason, during this National
Homeownership Month, to rededicate ourselves to this very worthy
Last Modified: June 21, 2004
Content Archived: January 20, 2009