Homeownership rate declines, despite increased values

Although housing affordability is near an all-time high, economic uncertainties continue to hold Americans back from making the transition to homeownership.

Although housing affordability is near an all-time high, economic uncertainties continue to hold Americans back from making the transition to homeownership.

Millions of prospective buyers are waiting on the sidelines for their personal financial situations to improve. While this has gone a long way in bolstering the rental market, the homeownership rate recently fell to a 50-year low, according to a report from John Burns Real Estate.

The company claims the rate was at just 62.1 percent at the beginning of August, but government data paints a very different picture.

"The 65.5 percent homeownership rate published by the U.S. Census Bureau greatly overstates the real level of homeownership in the country, as the Census Bureau counts all 3.8 million homeowners who are 90-plus days delinquent on their mortgage as homeowners," said John Burns Real Estate manager Sean Fergus.

In the past, the difference between actual and published homeownership rates was less than a percentage point, Fergus noted. However, the financial crisis and understaffing at lenders has hindered the loan modification process and other government initiatives meant to help Americans become homeowners and avoid foreclosure. 

Hardest-hit states show different story

In the wake of the real estate bubble burst, some states were hit harder by the wave of foreclosures that swept through the country than others. But streamlined repossessions and short sales in states such as Arizona, Texas and Nevada, allowed distressed borrowers to unload their troubled assets and get their lives back on track. As a result, many of these households are on the market shopping for property after losing their homes less than three years earlier.

"We are confident homeownership will come back," Fergus added. "Our survey of 20,000 consumers, and many surveys by others, confirms that the American dream of homeownership is as strong as ever."

Property values increasing

The falling homeownership rate could also be the result of a thinning inventory. Although this has left potential buyers with limited options, the lack of supply is driving home prices higher.

Property data indicates values appreciated 2.3 percent in June from the previous month, according to the most recent Standard & Poor's/Case-Shiller Home Price Index. Meanwhile, on an annual basis, prices were 0.5 percent higher.

 



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