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Democracy and the American Dream

Despite an increasingly desperate need for reform, American housing hasn’t seen innovation since the 1940s. Until now.

January 14, 2021

We hadn’t fully exhaled our proverbial sigh of relief in bidding au revoir to 2020 before 2021 delivered a gut punch.

We’ve lived through countless moments over the last year that will find themselves in history books. Yet, we remain optimistic that we will find clarity, time for healing, and a path forward as one.

The need to strengthen our democracy has never been more clear. Since conception, this country has tied its success in many ways to homeownership. But the 30-year mortgage, a mainstay of the American Dream, might not be the best way to achieve this outcome. Despite an increasingly desperate need for reform, American housing hasn’t seen innovation since the 1940s––until Rhove of course 😎.

Why, you ask? Let’s find out.

Homeownership: Where it’s Been, Where it’s Headed

Introduced in the 1940s as a way to expand access to ownership, there hasn’t been much iteration on the 30-year mortgage in over 80 years. We don’t drive the same Pontiac Streamliners that we drove in the 1940s 🙏. We don’t communicate via rotary phones. And we sure as heck don’t have the same approach to healthcare, social issues, and the environment. So why should we accept a system of housing that was designed almost a century ago?

Even in colonial times, our Founding Fathers characterized landowners (and by extension, homeowners) as the backbone of America, integral to a prosperous and truly democratic nation. They understood that ownership is about so much more than finance, that it creates a deeper sense of connection, accountability, and social responsibility. We have come to view the American Dream through this lens.

A central character in this dream of American homeownership is the 30-year fixed-rate mortgage. Born out of necessity in the early 1930s when lenders foreclosed on over 250,000 homes, FDR created the Home Owner’s Loan Corporation (HOLC) to purchase and reinstate these defaulted mortgages. 

FDR would go on in 1938 to create the Federal National Mortgage Association (Fannie Mae) to purchase mortgages from banks and lenders and incentivize additional mortgage lending to occur. This became an engine for the American government to promote lending for homeownership in the United States. 

But things eventually went sour. Twice.

After two economic crises surrounding the 30-year mortgage (one in 1966 and one in 2008), the tangled relationship between homeownership and the federal government left the market in deadlock and without innovation for decades. What began as a clever short-term solution to help more Americans realize the American Dream eventually ended up stifling it, perpetuating inequality, and demanding constant attention from the federal government. 

Today, during the COVID-19 pandemic, economic inequality has only increased. We have millions of unemployed Americans juxtaposed by skyrocketing home prices, and as a result homeownership continues to propel further out of reach.

We believe in providing paths for everyone to access ownership in our communities. We just don’t believe in doing it with an antiquated system that has failed, and is destined to continue to fail.

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We Believe in This Country

We will make it through this moment.

Last week, we witnessed one of the most blatant assaults on our sacred democratic institutions in this nation’s history. Our Capitol was overrun in an organized attempt to thwart the electoral process, the very crux of democracy. Let’s be clear. These were domestic terrorists attempting a coup. Their efforts were the direct result of the intentional spread of misinformation by the President to overturn a free and fair presidential election that he lost. They will fail. Today and the next few days may be horrifying. However, we will find clarity. And from that clarity, we will rebuild and we will thrive. This is America.

Read our full statement

In Other News

  • Yesterday, Donald J. Trump became the first U.S. President in history to be impeached twice.

  • AirBnB is among many companies grappling with a response to the current state of the country. After Wednesday’s attack on the Capitol, the short-term rental company announced that it would curb “riot tourism” by canceling all reservations in the Washington, D.C. area during the week of inauguration Day and reimbursing hosts for canceled reservations. Among other issues AirBnB has battled this year, “Pandemic Parties”.

  • The state of California reported a record $18.5 billion in tax revenue despite the social and economic hardships brought about by COVID-19. Read more about how this capital gains tax revenue infusion highlights the K-shaped recovery.

  • Investors are building tens of thousands of single-family houses expressly to rent in a bet that Americans will keep flocking to spacious suburban living even if they can’t afford to buy homes.

  • England has entered its third lockdown since the beginning of the pandemic, even as the National Health Service pushes to vaccinate 200,000 people a day.

Parting Thoughts

This great democracy has been through wars, depressions, political scandals, and health crises before, and we’ll make it out the other side stronger. We came to the brink and looked over the edge, but when called upon, our sacred institutions thwarted the enemies of American ideals.

Yes, there’s a lot to be concerned about as Americans. But we must remain hopeful.

With a new Presidential Administration beginning next week, there’s a chance for a fresh start. We must not soon forget the historic moment we witnessed last Wednesday in the U.S. Capitol, but let it bring us together and guide us rather than divide us.

It is during times of great struggle when we must innovate. This is when we roll up our sleeves and ask ourselves what we can do better––it's why we created a new category in housing.

We're bullish on the future of housing and ownership. And we're bullish on America.