Why Renting Isn’t Good for Society

Why is homeownership so important?  Last week I shared a graphic that in 2025 only 8% of 30-year-olds were both married and owned a home.  That’s a shockingly small number.  For generations, getting married and buying a home were milestones that signaled adulthood, responsibility, and community roots.  Today, millennials and Gen Z are shifting their priorities toward flexibility, renting, and avoiding commitments.  On the surface, that might look like freedom - but in reality, this trend is not healthy for the continued success of our country.

 

Renting: The Consumer Mindset

When you rent, the appeal is obvious.  No lawn to mow, no roof to fix, no water heater to replace.  You write a check each month, and when something breaks, you call the landlord.  You are, in essence, a consumer of habitation.  Your stake in the property is no different than your stake in your Netflix subscription - you pay, you use it, and you walk away when you’re tired of it.

But here’s the catch: with renting, the grievances are predictable.  The rent goes up each year.  The landlord doesn’t fix things quickly.  You’re at the mercy of someone else’s decisions, and at the end of the day, you’re left with no equity, no tax advantages, and no ownership stake in the community you live in.

 

Homeownership: A Higher Calling

Owning a home comes with responsibility.  You have to keep up with maintenance or things will fall apart.  You pay property taxes.  You pay insurance.  You deal with the reality of land-use decisions made by politicians you may or may not agree with.

And that’s exactly the point.  Home ownership ties you to the well being of your community.  You suddenly care about zoning laws, property taxes, water rights, insurance rates, and the quality of local schools.  You’re invested - literally and figuratively.  That sense of investment is why homeowners are statistically far more likely to vote, attend community meetings, and fight for the neighborhood they live in.

Renters, on the other hand, are several steps removed from these issues.  If property taxes go up, they don’t see the bill - at least not directly.  If land-use laws change, it doesn’t affect them.  If water rights are mismanaged, they’re less likely to notice.  With no “dog in the fight,” renters remain disengaged.  And disengagement is dangerous for democracy.

 

Why It Matters for Society

Study after study shows that homeowners build far more wealth than renters - 40 times more, according to Federal Reserve data.  That wealth allows them to send kids to college, start businesses, and eventually pass something on to the next generation.  Renters, by contrast, spend a lifetime paying into someone else’s equity.

But the impact goes beyond personal wealth.  Higher homeownership rates mean stronger neighborhoods.  Children in stable housing do better in school.  Communities with more homeowners experience lower crime.  Civic organizations, from the PTA to the local Little League, depend on homeowners who have roots in the community.  In short, when homeownership declines, society frays.

 

The Villain in the Story

So what’s driving this shift toward renting?  Some of it is cultural - young adults placing higher value on flexibility and experiences than permanence.  But a bigger culprit is structural.  On the mainland, corporate investors are buying up homes in bulk and converting them into permanent rental properties.  We haven’t seen that trend here, due to the high prices of Hawaii’s real estate.  Local governments are too quick to approve rental projects instead of neighborhoods designed for ownership.  Add in sky-high property prices and restrictive zoning, and the deck feels stacked against first-time buyers.

This is not just bad luck for individuals - it’s a dangerous trend for the country.  A society dominated by permanent renters creates a permanent wealth gap, less civic engagement, and weaker communities.

 

 

The Path Forward

We shouldn’t vilify renters - there will always be a segment of the population where renting makes sense.  But as a society, we can’t lose focus on the goal of ownership.  Our leaders need to prioritize developments that create homeowners, not just tenants.  That means:

• Zoning that allows starter homes and townhouses.
• Tax incentives and financing tools that make first-time ownership realistic.
• Curbing corporate ownership of single-family homes so families have a fair shot at buying.

 

And on an individual level?  We need to encourage people to think long-term.  Renting might feel comfortable now, but it’s a short-term solution with long-term consequences.

 

 

We stand at a crossroads.  Do we become a nation of permanent tenants, handing our financial futures to landlords and corporations?  Or do we recommit to the American dream of homeownership - a dream that builds wealth, strengthens families, and anchors communities?

The answer matters, not just for individuals, but for the health of our democracy and the strength of our country.  Ownership builds commitment, and commitment builds society.

 

 

Another Government Official Referred for Mortgage Fraud

This week Bill Pulte, the head of the FHFA, which oversees Fannie Mae and Freddie Mac, referred another government official to the Dept. of Justice for possible mortgage fraud.  The culprit this time is a sitting member of the Federal Reserve Boad of Governors.  The seven members of this board are the people that vote to raise or lower interest rates.

Lisa Cook was a contentious nomination to the board by President Biden.  She was ultimately confirmed by a fractured senate in 2022.  Critics believed her to be too partisan politically for the job.  She’s an academic economist by trade.  Cook was previously a professor of economics and international relations at Michigan State University

If the allegations are true, the acts committed are pretty damning.  It is alleged that within a 14-day period in 2021 Cook applied for and received mortgages on two separate properties – claiming both as owner-occupant primary residences.  Ouch.  According to Pulte, in 2021 Cook designated both a condominium in Atlanta and a home in Ann Arbor, Mich., as her primary residence when taking out loans.  In the referral, Cook obtained a loan on the Michigan home on June 18, 2021, and certified that she would use it as her “principal residence” within 60 days and for a full year.  Two weeks later, Ms. Cook purchased the Atlanta condo and affirmed that the property would be her principal residence.

 

Here's a perspective you won't find in any other article – because none of the reporters work in the mortgage industry:

 

If Cook was in contract to buy the Atlanta condo while applying for the loan on the Michigan property, she had to disclose to the Michigan lender she had additional debt coming.  No lender I know would allow you to close on loan #1 without providing documentation from the lender of the terms of loan #2.  And for the Atlanta loan #2, that lender would also need to see all the documentation of loan #1.  If Cook didn’t disclose the other mortgage application to each financial institution, that is another fraudulent offense.  What’s troubling for me is that it seems rather odd that neither financial institution did their due diligence in reviewing Cook’s application for credit.  It seems like she was given special treatment.

None of you could ever get away with what Cook is alleged to have done.  Lenders can check a database to see if you have pending applications with other lenders.  If other pending transactions are discovered, you will be required to provide documentation for that transaction.  That’s the only way a lender can accurately assess your debt-to-income ratio.

 

Pulte released a statement saying FHFA was tipped off to the possible fraud which triggered the investigation.  Pulte went on to say that the documents they uncovered showed Cook signed the paperwork for both properties herself.  These statements make for a much stronger case that other recent cases referred to the DOJ.

As of Friday, President Trump issued a statement of his intention to fire Cook if she didn’t resign on her own.  So far none of the other high-profile cases of mortgage fraud referred to the DOJ regarding US Senator Adam Schiff and New York Attorney General Letitia James have resulted in charges.  We’ll just have to wait and see what happens with Fed Governor Lisa Cook.

Regardless of one’s stature in life, those in power should never be allowed to get away with acts we’d be fined and thrown in jail for.  The penalties for mortgage fraud are severe and can include prison sentences of up to 30 years, and fines of up to $1,000,000.

 

 

 

 

And now the week’s economic news…….

 

Fed Chair Speech

During a light week for economic data, investors were focused on an annual Jackson Hole speech by Fed Chair Powell which has often been used as an opportunity to signal upcoming policy changes.  Powell did not disappoint, expressing modest support for looser monetary policy, so mortgage rates ended the week a little lower.

 

In his highly anticipated speech from the Jackson Hole economic summit on Friday, Fed Chair Powell suggested that the balance of risks on inflation and the labor market may justify cutting the federal funds rate.  He continued to emphasize that "sweeping" changes in government policies have elevated the level of economic uncertainty, increasing the difficulty of decision making by Fed officials and calling for a patient approach.  The primary challenge is that higher tariffs may cause the labor market to weaken, supporting lower rates.  However, they also increase inflationary pressures, calling for higher rates.  Most investors anticipate that the Fed will reduce the federal funds rate by 25 basis points at the next meeting on September 17.

 

In July, sales of existing homes rose 2% from June and were slightly higher than a year ago.  The median existing-home price of $422,400 was up a very slim 0.2% from last year at this time, at a record for the month of July.  Inventories remain consistent, standing at a 4.6-month supply nationally.  Still, inventories were 16% higher than a year ago.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The headline number for the latest home building data was encouraging, but the details of the report revealed mixed results.  Overall housing starts in July increased 5% from June to the highest level in five months.  However, the unexpected strength was primarily due to large gains in volatile multi-family units, while single-family starts rose a modest 3% from June.  Single-family building permits, a leading indicator of future construction, dropped 3% from June to the lowest level since June 2020.  A separate survey of home builder sentiment on housing market conditions from the NAHB unexpectedly declined to the lowest level since 2022.  According to the NAHB, 37% of builders cut prices in August and 66% used sales incentives, the most since the pandemic.

 

 

 

 

Next Week

Looking ahead, investors will continue to watch for additional information about tariffs and monitor comments from Fed officials for hints about monetary policy later in the year.  For economic reports, New Home Sales will be released on Monday.  Consumer Confidence will come out on Tuesday.  Personal Income and the PCE price index, the inflation indicator favored by the Fed, will be released on Friday.

 

Until next week….

 

*** Please note that Freddie Mac publishes their weekly rate report on Wednesday mornings from data received Monday and Tuesday. 

The graph above is intended to shown rate trends, and not “today’s current rate”. ***

 

 

Reviews From Our Past Clients

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Do you think all lenders are the same?

There is a difference when you use Hawaii Mortgage Company for your financing.  Here’s a short video telling you why:

 

https://youtu.be/c7AKQ5wa2_U

 

 

 

Broker vs. Banker?

Click the link below to get a quick lesson on why working with a Mortgage Broker will benefit you on your next transaction.

 

https://youtu.be/iH3igW5v2jE