Although homeownership levels are still at the second-highest levels ever, the percentage drop in homeownership over the past ten years has been the largest since 1940, at the end of the Great Depression, according to data released by the U.S. Census Department last week[1]. In the Midwest and in the South, slightly more than 2/3 of the population still owns their own home, but in the Northeast and out west those numbers have fallen below to 62.2 percent and 60.5 percent, respectively. “The changes now taking place are mind-boggling,” said economist Patrick Newport. “While 10 years ago owning a home was the American Dream, I’m not sure a lot of people still think that way.”
Interestingly, while homeownership rates for adults 35 to 64 are at their lowest rate since 1980, homeowners among young adults (34 and younger) is at the highest since the mid 1990s. A census survey statistician, Ellen Wilson, points out, however, that because homeownership was so high during the mid-2000s, these new low numbers may not be as bad as they sound. At one point, homeownership hovered around 70 percent in 2004[2]. The 10-year period decline was only 1.1 percent, whereas the drop from the peak (2004) was more than four percent.
Many economists and analysts are predicting that the empty houses in the country can be filled with “a nation of renters” as the renting trend evident in cities like New York, where 69 percent of all homes are rented, expands throughout the country. Do you agree that we may become a nation of renters? Would this be a good thing?
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[1] http://realestate.msn.com/blogs/listedblogpost.aspx?post=baab4d53-b03e-4bb6-9103-b308e60a21a3&ocid=vt_fbmsnre
[2] http://www.chicagotribune.com/classified/realestate/foreclosure/chi-home-ownership-sees-biggest-drop-since-great-depression-20111007,0,1721084.story
While not a big fan of banks, they, like most of the private sector have had their hands tied. More stringent lending requirements have not only hampered home ownership but, as more and more laws and regulations are being handed down by government of all levels, this tandem has landed a one-two punch to most investors. If the predictions in this article hold water that this nation will become a nation of renters, who will own the properties? The powers that created the environment?
We are not becoming a nation of renters, but that would not be a good thing if it ever happened. However, having a 60% homeownership rate is much better than having a 70% rate for many reasons. Not everyone is cut out for the responsibilities of homeownership. Markets are strongest when the ownershp is in the financially strongest hands. Another positive for having a lot of renters is it provides a larger pool of POTENTIAL buyers, whereas having a lot of owners creates a larger pool of POTENTIAL sellers. Just look at the fact that the strongest markets have the lowest homeownership percentages, while the weakest markets had the highest homeownership percentages. Unfoutunately, over the past decade many people thought homeownership was a “right” without ever considering whether or not it was a good thing.
It’s my understanding that in 1945 home ownership was 42%. When prices are low enough, as they are in a number of areas, that the net cost of owning is less than renting, home ownership will increase. Historically, the housing market is most stable when ownership is 60-65%. When we see that occur, the housing “bust” will be over.
Yes. For landlords.