Home Ownership Falls to Lowest Level Since 1965

[Le Taz Hot]

Source: CNN Money

NEW YORK (CNNMoney) -- As the foreclosure crisis continues to wreak havoc on the housing market, a source of national pride has taken a sour turn. Home ownership is on the decline and, according to a recent Morgan Stanley report, the United States is fast becoming a nation of renters.

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In fact, once they factored in delinquent mortgage borrowers (the ones who are likely to lose their homes at some point), Morgan Stanley calculated that the home ownership rate is more like 59.2%.

That's the lowest level since the Census Bureau started keeping quarterly records back in 1965 (before that, it recorded home ownership rates once a decade). The Census Bureau's statistics, however, do not factor in mortgage delinquencies.

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Read more: http://money.cnn.com/2011/08/05/real_estate/home_ownership/index.htm

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This says a great deal about what has happened to the "American Dream." A nation of renters is right.

[Uncle Joe]

1. Kicked and recommended.

Thanks for the thread, Le Taz Hot.

[jberryhill]

2. Nonsense - 100% of homes are owned

[David__77]

12. True. Owner occupancy rate.

That would make more sense.

[jberryhill]

14. Well you can go at it two ways

You can look at owner occupancy of the existing stock.

Or.. You can look at the ratio of natural persons who own homes!

[indurancevile]

15. its the percent of adults who own, not the percent of houses owned

[stopbush]

3. What sense is there in buying a home if you're only going to live in it for 4-5 years?

The American workforce has of necessity become a mobile work force. Almost nomadic, in some respects.

It made sense to buy a home when you had guaranteed employment with GM and looked to retire just about the time you paid off your mortgage. But who has that kind of security these days? For many Americans, hopping from job to job is the norm. For many, relocating every couple of years is a necessity just to have a job. Buy a home right now, lose your job in a couple of years and be stuck with a property that you're going to end up short selling.

What's they point? Renting is the better option and probably will be the better option going forward.

[applegrove]

4. 1965 is even before the housing market was based on two family member incomes. This is tragic.

[Tansy_Gold]

7. I was thinking the exact same thing. n/t

[BlueIdaho]

5. Another dividend from TeaPublican Economic Theory. nt.

Can poor houses be far behind?

[eallen]

6. Not all bad. A house is not an entirely safe investment.

The US has had a policy since WW II of encouraging home ownership, and Americans for many decades worked under the illusion that home-ownership was a safe investment. Both that policy and illusion helped feed the housing bubble. And recently encouraged financial derivatives on home mortgages, which exploded the housing bubble. That bubble's burst was a major cause of the financial crisis.

We need to return to the view: a) that a home doesn't always appreciate, b) that it carries all the risks of an illiquid asset, to wit, that an owner might be forced to sell precisely when the market is low, and c) that families should exercise some caution before committing to home ownership. That second point deserves some amplification. People and jobs are mobile. Houses aren't. Many of the same events that put financial pressure on homeowners -- a company shutting down, a company moving its operations, the decline of an industry -- also create local real estate slumps. Risk. Large risk, even in the absence of a major recession. The right question to ask before buying a house is: Can I afford a 20% to 30% loss, if I have to move in the next six years? For most people, at many points in their lives, the answer is no. They should rent. Enticing them to buy means enticing them to take on risk they can't afford.

It sounds bad to say we're a nation of renters. But we are a nation of mobile workers and of people whose careers might require moving a few times. I don't have any particular notion of what the "right" home ownership rate is. But it's pretty clear that it was foolishly high for most of our lives.

:hippie:

[indurancevile]

16. bs for "foolishly high for most of our lives."

[eallen]

17. It depends on how you view bubbles.

Some people's view of a bubble is that the only people who made a mistake are those who got caught in the implosion. Those who got out in time, through some measure of luck and caution, did just fine. And so if you take a static view of things, yeah, the market was just fine a couple of decades back. Ignoring the fact that that market was already based on false expectations of the future.

My view is that there is no telling when a bubble will burst.

:hippie:

[BulletproofLandshark]

8. Not a big surprise.

If people aren't going to be paid a decent wage in this country anymore, home ownership is only going to get harder.

[Igel]

11. Let's exculpate the guilty,

because they're also the victims.

It's not home ownership that's the problem. It's not even the homes that are owned; it's the homeowners.

In my neighborhood they bought all the house they could, had the largest mortgage they could afford. It was assumed that their incomes would increase while the mortgage remained flat. The hardship would be short-lived, tempered by increasing short-term debt.

Their incomes went down; some were unemployed for a while with little savings. The property values went down, putting them underwater.

Result: Lots of foreclosures and walk-aways. Not because they can't afford a home. They can. They can't afford the 2400 sq foot houses that they bought. The smaller houses have a much lower foreclosure rate--the kids that made fun of those living in the smaller houses often had to pack up and move in with Uncle Samuel.

With reduced incomes they can afford the smaller houses. Not the larger ones.

[SOS]

9. Quote from Little Bush

"We want everybody in America to own their own home. That's what we want."

Another mission accomplished from the nitwit.

[florida08]

10. yes

It's also an indication where our economy is going

[David__77]

13. This was inevitable.

First off, the housing stock today is very different from that in 1965. Much of it was constructed during the credit bubble of the 2000s, and the square footage of new starts has nearly doubled since 1965! The housing are more energy efficient and building codes make construction more expensive than decades ago. This is not really a reflection of lower real income per se, but rather a reflection of the mix of available housing, as well as increased consumption in other areas by a typical household.

Prices will continue to come down in real terms over the next several years.