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The Ownership Society Is Dead: Home Ownership Rate Drops to 1998 Level

The housing market’s woes continue forcing people into rentals, further depressing the home ownership rate in a nation that now has fewer homeowners than were created during the housing boom. In the first quarter, 66.5% of Americans owned homes, down from 67.2% a year earlier, the Census Bureau reported. The rate last hit this level in 1998. During the boom, when easy credit made mortgages available with less regard for income or ability to pay, the ownership rate surged to a record 69.2% in 2004′s second and fourth quarters and stayed near that level until the recession deepened. Now, some industry watchers expect the rate to slip below 65%. Housing experts say each 1% decline in the home ownership rate represents the movement of one million households to rentals. Some people can’t buy homes, while others just don’t want to. “The further decline … provides yet more evidence that Americans are now less able and less willing to buy a home,” wrote Paul Dales, senior U.S. economist with Captial Economics, in a client note. “But it also seems likely that there has been a reduction in the desire to own a home now it’s clear that housing is not a one way bet.” Americans have learned that the hard way. The first wave of trouble struck several years ago as borrowers took out so-called subprime mortgages with low interest rates that later reset, often with much higher payments that they couldn’t afford. The problem spread as the recession led to high unemployment. Now, as declining real-estate values leave many borrowers owning more than their homes are worth, more Americans are walking away.

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