The New Ownership Society

While the Kerry campaign and its allies are trying to emphasize bad news about the American economy, the facts keep getting in the way.Take the matter of homeownership. The Census Bureau reported in April that in the first quarter of 2004, 68.6% of Americans owned their own homes. That’s up from a high of 67.5% during the Clinton administration and is the highest rate of homeownership in 40 years.Those statistics are buttressed by the home-sales data from May, which indicate that the ownership trend is accelerating. Sales of existing homes in May set a record — 6.8 million sold, when projected out on an annualized basis, which is how these things are measured by the company Thomson Financial. This broke the previous record, which had been set in March.The pattern is holding for new home sales as well. In May these homes were selling at the highest rate in American history — 1.4 million, when projected out on an annual basis. That’s good news for the construction industry.Sales of new and existing homes together are, based on May sales, on pace to exceed 8 million a year in 2004. That would be a first in American history. All these transactions aren’t because of low prices, either; the median existing house price is actually up more than 10% compared to May of last year, according to Economy.com.It’s possible to carry this too far. Anecdotal evidence indicates that some of the efforts to push poor families into homeownership with government subsidies have resulted in increased foreclosure rates. And some of the risks are borne by government-sponsored enterprises like Fannie Mae.Still, the overall picture is that of expanding homeownership. It’s an expansion that goes along with the expansion of ownership of stocks and bonds through individual retirement accounts and 401k plans. When added to the unprecedented number of new businesses created in the past year, the home ownership rates and broad participation in investments translate into a pattern. America is becoming a new ownership society.This is more than an economic event; it is a cultural one. Owners think differently; they act differently; and they vote differently. Much has been made of the difference in world view between Europeans and Americans. Ownership is a key part of that difference. It’s more than economics, but it is economics that makes this possible. Americans can only afford to buy and own things if their income is high and growing, so it takes economic growth to create an ownership society. Furthermore, since people often own so that they can sell at a gain, capital gains tax cuts — credit to Reagan, Clinton, and Bush 43 — have been essential to our ownership explosion. Finally, a low interest rate environment is essential to encouraging our current housing boom. But only President Bush’s tax cuts could create an environment of sufficient productivity growth to allow high growth, low interest rates, and low inflation simultaneously.The Kerry camp is in the awkward position of wishing for bad economic news — never a position that puts one in tune with the mainstream of American voters, particularly those who are part of the new ownership society.

The New Ownership Society

The New Ownership Society

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