According to the U.S. Census Bureau, slightly less than two-thirds of the American population own their own home today. 65.9 percent of the country reported owning a home, but Morgan Stanley analysts argue that the number is much lower – more like 59.2 percent once borrowers who have delinquent mortgages but have not yet lost their homes are factored in[1]. This would put homeownership at its lowest level since 1965, which was the earliest point in time at which the Census Bureau recorded quarterly homeownership statistics. Even then, the bureau did not factor in mortgage delinquencies.
The Morgan Stanley report estimates that there may be thousands or even millions of people “still technically considered homeowners” who may “squat for months or even years because banks have been slow to process foreclosures in recent months.” Both Morgan Stanley and the Census Bureau are in agreement that homeownership levels, whatever they may be currently, are set to drop further in the coming months[2].
Does this surprise you? What should be done about this situation, or do we just need to let it play out?
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[1] http://money.cnn.com/2011/08/05/real_estate/home_ownership/index.htm
[2] http://www.housingwire.com/2011/07/29/homeownership-drops-to-1998-level-2
And we wonder why our economy is in the toilet! Homeownership is the backbone of the US economy! it is the reason such retail outlets as Home Depot and Lowes exist! It helps explain the rise of such retail giants as Pet Smart and Pet Goods (renters have a hard time finding a home that will allow pets). Homeowners tend top be more stable and are more about keeping their communities clean and safe.
What needs to be done, and yes I know I sound like a broken record, is to modify mortgages and keep people in their homes if at all possible! THAT will turn the real estate market AND the economy around practically over night. Let the AMERICAN DREAM live on!
I work the front lines of this economic meltdown. I regularly sit at the kitchen table with people (and no, these are NOT deadbeats) facing foreclosure.
I also sit around big tables in mahogany filled law offices where savvy property owners are plotting their strategic default along with their “counselors.”
I agree 100% with those who say these gov’t “help” programs have failed MOST property owners. Sure, some people have been helped. Most have not….
Most serious issue I see as housing VALUES continue down is that more and more property owners capitulate, finally deciding NOT to keep throwing good money at a property still upside down and probably upside down for many years to come.
Forget trying to throw “moral obligation” at people – we’re long past that tactic.
Forget lip service about housing recovery – for months, people have witnessed brisk sales as property values slide down…despite sales. In fact, shadow inventory replaces sales though at lower list prices. Of those sales in my area (Sarasota, FL) it’s people out of state or out of the country who are buying – it’s not locals. Too much fear of losing jobs forces locals to stay where they are.
Everyone around here knows someone with a “bullet proof job” who lost that sure thing. No one is safe from job loss today. Too many wealthy people are taking and haven taken a beating in the stock market and with pensions.
Too many seniors have faced uncertainty with benefits.
Last week, it was helping people with subprimes avoid foreclosure.
Yesterday, it was helping people with Alt-A mortgages avoid foreclosure.
Today, it’s helping people who are strategically defaulting avoid foreclosure.
Whether right or wrong, debt owners (i.e. banks for easy reference) must re-write loans, writing down the difference b/t what is owed and what today’s value.
It’s reported home ownership benefits the economy: “…housing is a key driver of our economy, accounting for 15% of our Gross Domestic Product in general. Research shows that for every home purchased, $60,000 is pumped into the economy for furniture, home improvements and related items. Plus homeowners pay 80-90% of individual federal income taxes, contributing to federal programs that benefit all Americans.”
“…for every home purchased, $60,000 is pumped into the economy….”
Daily, I see the problems caused by a housing collapse. Whatever solutions I offer probably are so simplistic & short sighted. I admit, I know nothing of the back room dealings b/t banks, mortgage debt investors & government.
Once upon a time, I didn’t know the role mortgage insurance played in default.
Once upon a time, I didn’t know that banks servicing mortgage debt have more incentive to watch your house go into foreclosure than to help you save it.
Once upon a time, I didn’t know about Loss Share Agreements. Naturally, our elected politicians chose to thrown more of OUR money at rich people who profit off kicking Americans out of their homes instead of modifying their mortgages or allowing them to short sell.
Play it out? I think the rich have played enough at our expense.
Mike Payne
Expect the ownership rates to continue to drop. If they are informed investors they will not buy something that they can rent for less and not be exposed to the equity destruction that is GOING TO CONTINUE.