Homeownership rate hits 19-year low
In the second quarter, 64.7 percent of Americans owned homes.
The share of Americans who own their homes was 64.7 percent in the second quarter, down from 64.8 percent in the previous three months, the Census Bureau said in a report today. The rate matched the level in the second quarter of 1995.
Housing has become less affordable and more difficult to finance for entry-level buyers, even as mortgage rates have held close to record lows. First-time purchasers accounted for 28 percent of all sales of previously owned homes in June, compared with about 40 percent historically, according to the National Association of Realtors.
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"The first-time buyers are the ones who would be the net addition to homeownership," Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA LLC in New York, said in an interview. "Those people, who are generally college grads or the ones who just got married, are not owning homes like they used to. Credit is tighter, they’re laden with student loans and their incomes are lower than they used to be."
U.S. home prices increased 9.3 percent in the 12 months through May, according to the S&P/Case-Shiller 20-city index released on Tuesday.
The homeownership rate for all Americans peaked at 69.2 percent in June 2004 and plunged as the housing market crashed, according to the Census Bureau.
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When did the "American Dream" become the "American ENTITLEMENT"?
When you consider the millions who have filed bankruptcy and foreclosed on their homes between 2007 and 2011, home ownership is surprisingly high and still above historic rates before the bubble. It takes 7 to 10 years to fully restore ones credit after a bankruptcy and this has kept allot of people who can afford a home out of the market due to bad credit.
I would expect this vast pool of home buyers to return to the market in the coming years especially with rates still at historic lows. It wont be a boom, but I would expect the ownership rates to tick up just a little in the next few years.
Why does this article just focus on first time home buyers? People can't afford to buy a house when they can't find a good paying job. And what about all of the foreclosures? Article doesn't mention that at all. I guess the economy still not recovering has nothing to do with it?
I'll tell you why first time homeowners are not buying. In the past you bought that first home even if it didn't have everything you wanted because it was the FIRST/TEMPORARY home. The plan would be for it to appreciate and you sell it at a big profit and use that money to buy your SECOND/PERMANENT home. Maybe you even settled for a less than perfect 2nd home because that was also a stepping stone to your THIRD/DREAM HOME. The point is that you were willing to compromise because you saw a path to something better.
Well now that very un-ideal first home is barely affordable and chances are it may decrease in value, stay about the same, or appreciate a little - but not enough to move up to something better. So now that FIRST home is all you will likely ever be able to afford and it is nothing to get excited about because you are settling. There is no excitement in being stuck forever with a house that you don't really like all that much.
The second reason is that everyone knows in this economy you need flexibility and mobility if you should lose your job. There is no job security. People bought houses in the past because there was job security. We are expecting people to make a 30 year commitment or even a 5 year commitment(assuming they can sell it) when they don't even know if they will be laid off, outsourced, downsized, right sized, or replaced by computers at the drop of a hat. What surprises me is that anyone is buying houses at all.
64.7% down from a peak of 69.2%... So, only 4.5% less than the high?
Sounds like home ownership rates are pretty damn solid. There is no story here.