Homeownership at Lowest Level Since 1998

[stats45]

The Census Bureau collects homeownership statistics, and in their last housing survey, they found that the lowest percentage of households are homeowners since 1999.

The number will probably fall with all of the foreclosures, short sales, and deliquencies yet to settle.

Thoughts? Reactions?

I hope that this makes people, lenders, and the government a bit more cautious about homeownership.

[cytoglycerine]

I never understood why everyone was so gung-ho for everyone to be a homeowner in the first place...

ETA - I'm a homeowner myself, and although I don't necessarily regret the decision, I do find homeownership to be a little overrated.

[tea4me]

Feb 1, 2011 13:49:14 GMT -5 @cytoglycerine said:

I never understood why everyone was so gung-ho for everyone to be a homeowner in the first place...

ETA - I'm a homeowner myself, and although I don't necessarily regret the decision, I do find homeownership to be a little overrated.

I don't like owning a home . . . . yet I don't want to sell it either.

[thyme4change]

It doesn't surprise me. 1999 wasn't THAT long ago. I mean - this was also the worst recession since 1999, so even if it didn't have such as heavy real estate component, I would expect homeownership to go down. I also am not overly concerned with trends that reappear every decade or so. I believe strongly that the economy is cyclical, and that homeownership will creep up over the next few years (or decade.)

Now, if someone said that homeownership was the lowest since 1963 - then I would think that matters. But for things to be where we were 12 years ago - meh. Cyclical.

[whoisjohngalt]

I believe strongly that the economy is cyclical,

Unless, of course, our govt gets very very involved and tries to "correct" it

Lena

[cytoglycerine]

Feb 1, 2011 13:51:50 GMT -5 @tea4me said:

Feb 1, 2011 13:49:14 GMT -5 @cytoglycerine said:

I never understood why everyone was so gung-ho for everyone to be a homeowner in the first place...

ETA - I'm a homeowner myself, and although I don't necessarily regret the decision, I do find homeownership to be a little overrated.

I don't like owning a home . . . . yet I don't want to sell it either.

Yeah I think I fall into that category too...Awkward position to be in isn't it? lol

[stats45]

Good point thyme. Here is the homeownership rate by every five years since 1965.

1965: 63.4%
1970: 64.0%
1975: 64.5%
1980: 65.5%
1985: 63.5%
1990: 64.1%
1995: 65.1%
2000: 67.5%
2005: 69.0%
2010: 66.5%

I wonder how much further it will fall. I believe that it could fall to 64% or so.

[Deleted]

Part of what caused the mortgage crisis was the government wanting everyone to own a piece of the American Dream by taking out a mortgage. When you get beyond a certain level of homeownership (about 70% of the population), you're selling to people who don't have the financial stability, the discipline, the know-how to hold down a mortgage and maintain a house properly. The rate is probably depressed now because even some people who could qualify are waiting for prices to go lower or have decided they like renting. Others may be ready to go back in but are shut out because of recent foreclosures or short sales on their records.

[thyme4change]

So, the anomoly isn't rates of today - it really appears to be the rates between 2000 and 2005. So, the point isn't that homeownership has dropped from where it has always been - it is really that it was way out of control during the 00's, and now we are getting back to normal. The 64-ish% of people that can responsibly own homes, are, and the 5% that should have never owned a place are getting out and going back to being renters. And the 30-ish% that were never "owners" are still not owners.

And when I say "people" I mean general categories - so 20 year olds, most likely didn't own property in 1995, and 20 year olds probably don't own property today. If you were 20 in 1995, but you are 35 now, you have changed groups from a group that probably shouldn't own property to a group that might very reasonably own property. So, don't get all excited that I said you shouldn't own property.

Anyway, back to what the statistic actually means - we are nearly back to a normal sustainable level. Maybe we are getting close to the end.

[Deleted]

"So, the anomaly isn't rates of today - it really appears to be the rates between 2000 and 2005."

My thoughts as well. Some people really shouldn't own property. I don't mean this in an elitest kind of way but you need to have time, money and some stability to make it work.

[jkscott]

Thyme with two very good points. Exalted.

[Savoir Faire-Demogague in NJ]

Good point thyme. Here is the homeownership rate by every five years since 1965.

Stats, there is very little deviation in those 5 year numbers, with the exception of 2005, the trend is fairly steady and really does not show much change at all.

[thyme4change]

I agree SF - which is yet another reason why the original statement that levels are at the lowest since '99 is not really anything to talk about. I don't know if anyone can draw any meaningful substantial conclusions from a 1% variation.

[jkscott]

There is a ton of information in those stats. Just like Thyme said, the anomaly lies in the 00's. We are going back to where home ownership should be.

[stats45]

That is true on a macro-scale Savoir, but there are strong swings within age cohorts and a few other demographic categories. Plus, each percentage point represents about one million households so even small swings can have large consequences.

I agree that 63-65% overall is the historical average though it can be hard to compare without making some adjustments because the average household looks different than it did in 1965.

[Savoir Faire-Demogague in NJ]

That is true on a macro-scale Savior, but there are strong swings within age cohorts and a few other demographic categories. Plus, each percentage point represents about one million households so even small swings can have large consequences.

It would be interesting to see those numbers as well..

[Deleted]

You know, I shouldn't have bought a house when I did back in 2001. The seller had to pay closing, and I put 5% down on a $115,000 house. I had to get my income tax refund to do that.

Fast forward to 2004. The seller had to pay closing, and I put 10% down on a $142,500 house. I didn't need my income tax refund this time, but I did need a 10% second mortgage to avoid PMI.

Fast forward to 2011. I will pay off the second mortgage in about six months. It was a 10 year balloon when I got it. I also pay extra ($35 a month) toward the principal on the original mortgage.

Those days that a lot of you criticize helped some of us buy homes who couldn't have otherwise. If I had had to save up $40,000, I would still be in an apartment. Some of you wouldn't have sold your "starter" homes without the increased number of buyers. Some of you are stuck in homes that you would like to sell because these buyers have disappeared.

I'm not arguing that EVERYONE should own a home, but having 20% plus closing costs shouldn't be an absolute requirement . . . assuming that there should be ANY mobility in the market. Without that mobility, the housing market will be stagnant for decades.

So there has to be a middle ground . . .

[jkapp]

Feb 1, 2011 19:37:08 GMT -5 @southernsusana said:

You know, I shouldn't have bought a house when I did back in 2001. The seller had to pay closing, and I put 5% down on a $115,000 house. I had to get my income tax refund to do that.

Fast forward to 2004. The seller had to pay closing, and I put 10% down on a $142,500 house. I didn't need my income tax refund this time, but I did need a 10% second mortgage to avoid PMI.

Fast forward to 2011. I will pay off the second mortgage in about six months. It was a 10 year balloon when I got it. I also pay extra ($35 a month) toward the principal on the original mortgage.

Those days that a lot of you criticize helped some of us buy homes who couldn't have otherwise. If I had had to save up $40,000, I would still be in an apartment. Some of you wouldn't have sold your "starter" homes without the increased number of buyers. Some of you are stuck in homes that you would like to sell because these buyers have disappeared.

I'm not arguing that EVERYONE should own a home, but having 20% plus closing costs shouldn't be an absolute requirement . . . assuming that there should be ANY mobility in the market. Without that mobility, the housing market will be stagnant for decades.

So there has to be a middle ground . . .

Well, if demand hadn't been artifically increased, thereby skyrocketing the prices of houses, then saving 20% wouldn't be that bad

If you buy a $150,000 house that would mean $30,000 for the 20% downpayment. That sounds like a lot, but for a two income couple it can be easily done (heck I did it and am only one income, and I was getting paid low to mid $30k most of the time). As long as people are frugal and don't indulge on expensive hobbies or luxuries it can be done. A little sacrifice and patience can go a long way. But these days THAT seems to be asking a lot.

As those annoying commercials go: IT'S MINE AND I WANT IT NOW!!

[wvugurl26]

Depends on where you are making low $30s at. In DC/Baltimore no, I couldn't bc I like living in a safe neighborhood, etc. Where I used to live yeah sure I could save up a $30k downpayment and $150k would buy a very nice house. I'm not sure $150k would buy me a teeny condo anywhere I'd want to live in DC/Baltimore.
That being said I really have no desire to own property here bc a) most of the construction is piss poor in quality, b) I think its still overpriced and c) I'm definitely not ready to settle and buy a house.

[greeneyedchicka]

Feb 1, 2011 21:32:02 GMT -5 wvugurl26 said:

Depends on where you are making low $30s at. In DC/Baltimore no, I couldn't bc I like living in a safe neighborhood, etc. Where I used to live yeah sure I could save up a $30k downpayment and $150k would buy a very nice house. I'm not sure $150k would buy me a teeny condo anywhere I'd want to live in DC/Baltimore.
That being said I really have no desire to own property here bc a) most of the construction is piss poor in quality, b) I think its still overpriced and c) I'm definitely not ready to settle and buy a house.

I am with you. I am looking in the Baltimore area right now, and I can't help but to drive by places and think to myself, "You want $300,000 for THAT?" Way, way, way overpriced. I can't even come by a condo for under $160,000.

[BeenThere...DoneThat...]

...interesting thread... and I wonder about these stats in correlation to the % of single head of households... we've got to have more of those as a % of the populace as opposed to 1965...

[wvugurl26]

"You want $300,000 for THAT?" Way, way, way overpriced. I can't even come by a condo for under $160,000.

And that is why I'm not really interested in owning here besides not wanting the headaches of owning. Plus I need to do some damage to my student loans bc they are fixed at 6.8%, they need to die. ;D
One of the places my brother lived the plywood on the roof was so thin it was bobbling under a guy who weighed 160 pounds. I have no idea how they got the roof on.

[Elizabeth]

Unfortunately I have to own and rent. DH and I bought a house in Phoenix in April 2009. I had a gut feeling at the time that we shouldn't, but it was my dream house in a great neighborhood so we went for it. There was also that $8,000 homebuyers credit that year (which we never got! ) so it seemed like a good deal on paper. Literally weeks after purchasing the house, the value tanked because of some foreclosures in the neighborhood. Then in December of 2009, I was transferred for work to San Diego. With the house being underwater, I can't sell it. So I rent it out for about half of what the mortgage is while I rent in a HCOL area. I can't wait to pay it down to a point where I can just break even and get sell it. I don't care if I make one red cent!

[dcmetrocrab]

I never understood why everyone was so gung-ho for everyone to be a homeowner in the first place...

Measure of sucess? Homeownership = American Dream, hence the higher the % of the US that owns, that must correlate to a higher number of shiny happy successful people. To the goverrnment and municipalities, stability! Harder for good tax payers to leave the state when they put their roots down, drives people to keep their jobs versus moving around, forcing function to become a responsible adult and fill your house with furniture, home renovations, give birth to new tax payers, etc etc etc.

;D

[michelyn8]

I want to be a homeowner but I also realize I am not financially ready to be one. I work at it but because I can't decide where I want to live, its kind of low on my list of priorities the next year or so.

My only reason for wanting to own is because in "my house" and on "my property" I can do pretty much whatever I want to it. If I want to paint the walls of my living room purple with yellow stripes, I would be able to. If I want to put a shed in my backyard, I can (unless there are HOA rules against it but I do know I want to be in a rural area where those don't really exist). I don't have that freedom with renting. But on the other hand, if the water heater busts in December or the heat pump stops working in July, I only have to make a phone call to my landlord and its his problem to fix.

[thyme4change]

and I wonder about these stats in correlation to the % of single head of households... we've got to have more of those as a % of the populace as opposed to 1965...

We definitely have more single HOH, but we probably don't have drastically more single income families. It seems like we eliminated the husband's role in those single-mom households, but really we eliminated that housewife role. For any family with children old enough to latch-key, the financial impact is fairly negligible.

[AgeOfEnlightenmentSCP]

The scientific / technical term for this is a "market correction". Let's face it- not everyone is qualified to buy a home.

Government intervention in the market tried to make it so, but we see how that works out.

Now, we are returning to historical norms.

[The J]

Comparing home ownership numbers from the height of the dot com era to the aftermath of the housing bubble doesn't provide a relevant picture of anything other than that the economy is in a different place right now.

[stats45]

I understand J, but the height of homeownership wasn't during the dot com era, it was in 2005 and 2006. This suggests that there were factors other than people making more money that led to the explosion of home buying.

I'm interested in how low the numbers will fall. There were around 1.5 million foreclosures and short sales last year, but over 4.5 million homes that were over 90 days deliquent. Not all of the deliquent homes were primary residences (so they wouldn't impact the home ownership rate), but I think that the number still has a way to fall.

[The J]

Feb 3, 2011 11:39:29 GMT -5 stats45 said:

I understand J, but the height of homeownership wasn't during the dot com era, it was in 2005 and 2006. This suggests that there were factors other than people making more money that led to the explosion of home buying.

I'm interested in how low the numbers will fall. There were around 1.5 million foreclosures and short sales last year, but over 4.5 million homes that were over 90 days deliquent. Not all of the deliquent homes were primary residences (so they wouldn't impact the home ownership rate), but I think that the number still has a way to fall.

Comparing the rate during the height of the housing bubble and during the aftermath of the bubble bursting tells you one thing: the bubble burst.