According to the latest report from the Mortgage Bankers Association's (MBA) Research Institute for Housing America (RIHA) the continuing decline in homeownership rates is merely returning the country to more normal levels. The RIHA report "Homeownership Boom and Bust 2000 to 2009: Where will the Homeownership Rate Go from Here?" was conducted by professors Stuart Gabriel of UCLA's Anderson School and Stuart Rosenthal of Syracuse University.
The homeownership rate has declined from an all-time high of 69.2 percent in 2004 to 66.4 percent in the first quarter of 2011. The report calls the higher rate an unsustainable level that coincided with looser credit conditions that enhanced household access to mortgage credit and a less risk-averse attitude toward investing in a home. The authors found that the increase in homeownership was present in all groups but was most pronounced among individuals under age 30.
Homeownership began to decline with the onset of the housing crisis in 2007 and is now back to about where it was in 2000. Homeownership has long been seen as a symbol of economic achievement and as an important mechanism for accumulating household wealth. On a macroeconomic level homeownership increases housing demand and likely contributes to new home construction while households tend to spend out of the equity of their homes. Given how critical homeownership and housing are to the economy, the important question is whether the rates of ownership will fall still further. Read More...
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