Homeownership rates decline. Is this bad news?
Both Pres. Bush and Clinton have spoken often about the need to continually raise the homeownership rate in the United States. The theory goes that owners care more about their communities and neighborhoods than do renters.
Now you can argue, and I certainly do, that this theory is more than a little bit insulting to renters. Regardless, spurred on by looser lending standards, the homeownership rate rose steadily during these presidents’ terms. Something new is happening now, though: The homeownership rate is starting to dip.
Is this a bad thing? Not necessarily. I’ve already written several times that not everyone should own a home. The homeownership rate in the third quarter of this year, according to the latest figures from the U.S. Census Bureau, stood at 68.2 percent. That’s down from a rate of 69 percent in the third quarter of last year. In a story in BusinessWeek last week, writer Peter Coy predicts that this rate will continue to drop. Christopher Burdick, director of economic analysis at the Schwab Center for Financial Research, quoted in the story, says that the rate could fall to 67 percent soon.
The BusinessWeek story asks an interesting question: Was the ownership boom from 1994 to 2004 – when homeownership rates soared from 64 percent to 69 percent – a result more of loosened lending practices by mortgage companies instead of demographic changes in the number of households reaching home-buying age? If loosened lending policies did indeed spur the boom, we’ll probably see the homeownership rate continue to decline now that mortgage lenders, soured by their experiences with the subprime lending crisis, have tightened their lending standards.
Again, it’s not necessarily bad for the country if homeownership rates do decline. Sure, plenty of families were able to get into homes during the housing boom that may not have been able to do so previously. But there were also plenty of households that took on the burden of a mortgage loan when they were financially unprepared to do so.
My theory has always been a simple one: It’s nice to own a home … unless those mortgage payments became a financial burden. Then it’s a nightmare.
Tags: BusinessWeek, Census-Bureau, declining-homeownership-rate, homeownership-ratesRelated Stories
POSTED IN: Breaking News, Buying a Property, Educational Tools, Insights and Commentaries, Mortgage, Real Estate Tools, Real Life Stories, Rent, Road to Profits
0 opinions for Homeownership rates decline. Is this bad news?
No one has left a comment yet. You know what this means, right? You could be first!
Have an opinion? Leave a comment: