According to Census Bureau statistics the U.S. homeownership rate remained at 66.9% in the 3rd quarter of this year. It is actually at the lowest point since the end of 1999, the decline predictably brought on by the severe real estate turbulence that continues to roil the market to this day. For the last year the drop has been 0.7%. Interestingly, the West had the lowest percentage at 61.3 while the Midwest exhibited the highest at 71.1%.
It could lose more ground in the coming months since mortgage foreclosures seemingly are not abating, banks are still repossessing houses by the thousands and the weak economy waters down consumer interest in buying homes. Moreover, the government currently is heavily subsidizing housing, pushing the idea that every American should make an effort to own a home. But some real estate observers are beginning to argue that the subsidies should be curtailed. Homeownership isn't for everyone, they add. And they have a valid point by just pointing at today's high mortgage foreclosure numbers. Therefore, should Washington remove some of the subsidies, it would further erode the homeownership rate.
Now, let's consider something else that may happen.
The fact is that the deep mortgage finance and housing recession has dramatically scaled back prices, often more in the hardest-hit states like Nevada, California, Arizona and Florida than in some other parts of the country. In some newer Las Vegas suburbs values have crashed up to 60%, dragging them way down to levels last seen in the 90's. Understandably this kind of correction will put a smile on faces of many aspiring home buyers. What it does is bring the price structure to a level where consumers who couldn't afford to purchase a property a few years ago can now start looking. So long as they have confidence in the real estate market and can meet the current more stringent mortgage qualifying guidelines.
The reworked price framework could actually keep the homeownership rate pretty much where it now is, or perhaps even nudge it upward.