Homeownership in the US threatens to fall to its lowest percentage since 1960, because of the volume of foreclosures which has continued to increase into 2010. The latest data showed that 66.9% of Americans owned their home in the second quarter of this year, down from 69.4% in 2004.
“Anybody who knows anything about housing thought it would be flat in the second quarter,” said John Burns, CEO of John Burns Real Estate Consulting, a national housing market analyst based in Irvine, Calif. “Homeownership fell during the quarter when government was offering a tax credit (to first-time homebuyers). What do you think is going to happen now that there’s no tax credit?”
The continued decline “0.5 points lower than the same time a year ago ” points to a fast plunge, he said.
Burns believes that up to 6 million of the 8 million households currently in distress could lose their homes in the next 2 years. This “shadow inventory” could push ownership rates down to 61.7% within two years, he said.
Some believe that it will not fall as quickly, because some of the foreclosed homes will be bought by first time buyers, who will then become homeowners.
Either way, it is missing the point to think that falling homeownership is a problem, as far as problems from the economic crisis and the massive number of foreclosures goes, falling homeownership is a pretty small one.
Homeownership fosters stability, and a high percentage of homeowners, a good, cared for neighbourhood and/or community. But joblessness, homelessness, depression, desperation and empty houses are all far bigger side effects than anything surrounding a 10% drop in the percentage of homeowners.
According to some, falling homeownership is not only being caused by the crisis, and some, including Burns even believe that, right now, falling homeownership is a good thing.
According to Burns, large numbers of households right now do not have the responsibility to hold down a mortgage. It may be that these are being kept from obtaining a mortgage by the stricter credit systems, which is a good thing in preventing future financial meltdowns.
Daniel McCue, senior research analyst at Harvard University’s Joint Centre for Housing Studies says another factor causing homeownership to fall is more people questioning the pros, cons, risks and rewards of homeownership and deciding whether homeownership is right for them.
“We’ve seen low-income homeowner rates declining by twice as much as higher-income groups. Everyone is looking harder at the benefits and potential risks of homeownership. Is it the right option for you?”
Image credits: Taber via Flickr