The Housing Chronicles Blog: Homeownership rates take a dive

Tuesday, January 29, 2008

Homeownership rates take a dive

Although politicians have been trumpeting the increase in U.S. homeownership levels over the past few years, we now know that much of that increase was built on financial quicksand that would be unable to stand the test of time. And homeownership is important: it means more stable neighborhoods, as owners are more invested than renters and helps people plan more for a longer time horizon (at least in theory).

Unfortunately, the latest result from the mortgage crisis is a sharp decline in homeownership levels to 2002 levels. From a CNNMoney.com story:

The Census Bureau report showed that home owners accounted for 67.8% of occupied homes in the fourth quarter, down 1.1 points from a year earlier. It's the largest year-over-year drop recorded in the report.

"It's an incredible story," said Dean Baker, co-director of the Center for Economic and Policy Research. "We're back to where we were in 2002, which is before the subprime nuttiness and run-up in prices. And it's not clear how much farther we're going to fall."..

"The vast majority of those switching from ownership to renting are foreclosures or those forced to sell because they can't make the payment," said Baker. "What's really striking is we should have seen a rise of ownership because of the demographics, with all the baby boomers entering their peak home ownership years. Instead, we're seeing it fall quite a bit."

1 comment:

Maggie said...

Happened to come across this during my finance dissertation research. Oh how things have got worse since this was written. This ties in with another article I found on a book review at http://www.thefinanceowl.com/ . I wonder if we will be surprised at the next crash 30 years from now!!
Maggie