OF COURSE HOME OWNERSHIP IS DOWN. THE "WHY"s ARE TOO MANY TO LIST.

                                                 * * * *  HARD CORE REAL ESTATE TALK  * * * *

HOME OWNERSHIP DOWN??  DOWN FROM WHAT?

An interesting question posed by Paige Rousch this a.m. made me think. 

Quoting from the Census report, Paige says that, home ownership is down to a mere 67.2%. 

Paige wants to know. . . . "To what do we attribute these trends???"

Thinking. . . .  Thinking. . . .  Thinking . . . .

Goodness.  How many causes for lower home ownership can we count???

• Tighter lending guidelines
• Higher unemployment
• Uncertain financial future
• Higher cost of living
• Higher utility costs
• Higher real estate taxes
• Higher home owners insurance costs
• The high level of home ownership was fueled by unrealistically low interest rates
• The high level of home ownership was fueled by unrealistically low qualifying guidelines

The high level of home ownership was fueled by:  Greenspan's policy of keeping interest rates low to help the recovery of Wall Street following 9/11, easy mortgage qualifying, rapid increase in home prices. 

Then, since Congress acts in direct relation to PAC contributions, efforts to control an out of control Fannie Mae, Freddie Mac, HUD, to regulate easy lending were thwarted and, to the contrary, pressure on lenders to easy lending standards was intense.  Securitization of MBSs rewarded Wall Street with obscene profits fueling the need for more and more mortgage loans in the secondary market pipeline. 

Home Ownership expanded to a rate of about 70%, far higher than the historical percentage of about 62-65%, tuntil it all came crashing down.  First a trickle of loan defaults when the first ARM instruments began to reset to higher rates. 

"BUT I WAS SUPPOSED TO BE ABLE TO REFINANCE", said the home owner with an Option Arm on which the "teaser rate" just reset 2% higher. 

As prices fell, fewer and fewer home owners were able to refinance out of the resetting ARMs they understood were only temporary, 2-4 years at most. 

"I'll just sell", said millions of home owners faced with ever higher mortgage payments.  SORRY!  If the property value has fallen to less than you owe, you can't sell without taking money to settlement to pay the deficiency, plus the cost of sale (the real estate commission). 

21% of all mortgages are "under water".  Most will either sell by short sale (takes the patience of Job) or will be foreclosed.

IT WAS ALL OVER!

THE ABOVE, AND A FEW CONTRIBUTING FACTORS ARE WHY HOME OWNERSHIP IS DOWN TO 67.2%.

AND STILL FALLING!

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.