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Homeownership Rate in U.S. Falls to Lowest Since 1997


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Homeownership Rate in U.S. Declines to 65.4%, Lowest Since 1997

Homeownership Rate in U.S. Declines to 65.4%, Lowest Since 1997

Homeownership Rate in U.S. Declines to 65.4%, Lowest Since 1997

Benjamin Lowy/Getty Images

Blocks of Cuyahoga County are filled with vacant and stripped homes on Feb. 2, 2012 in Cleveland, Ohio.

Blocks of Cuyahoga County are filled with vacant and stripped homes on Feb. 2, 2012 in Cleveland, Ohio. Photographer: Benjamin Lowy/Getty Images

Graham Fisher's Rosner on U.S. Housing Market

April 26 (Bloomberg) — Joshua Rosner, an analyst at Graham Fisher Co., talks about the outlook for the U.S. housing market and homebuilder stocks.
He speaks with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)


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Homeownership Rate in U.S. Declines

Homeownership Rate in U.S. Declines

Homeownership Rate in U.S. Declines

Andrew Harrer/Bloomberg

Keys hang on the wall of a five-bedroom row house for sale in the Logan Circle neighborhood of Washington, D.C. The homeownership rate probably will settle around 64 percent, where it stood from about 1965 to the mid-1980s, because credit conditions are similar to that era, according to Patrick Newport , U.S. economist with IHS Global Insight..

Keys hang on the wall of a five-bedroom row house for sale in the Logan Circle neighborhood of Washington, D.C. The homeownership rate probably will settle around 64 percent, where it stood from about 1965 to the mid-1980s, because credit conditions are similar to that era, according to Patrick Newport , U.S. economist with IHS Global Insight.. Photographer: Andrew Harrer/Bloomberg

The U.S. homeownership rate fell to
the lowest level in 15 years in the first quarter as borrowers
lost homes to foreclosure and tighter inventory and credit kept
buyers off the market.

The rate dropped to 65.4 percent from 66 percent in the
fourth quarter and fell a full percentage point from a year
earlier, the Census Bureau said in a report today. That is the
lowest level since the first quarter of 1997, and down from a
record 69.2 percent in June 2004.

Mounting foreclosures are displacing borrowers, while a
lack of inventory has kept home sales from accelerating amid
record affordability, the National Association of Realtors
reported April 19. Stricter mortgage standards are also limiting
purchases as rental demand surges, said Paul Diggle, property
economist with Capital Economics Ltd. in London.

“Although house prices and mortgage rates have fallen to a
level that makes buying preferable to renting, ongoing problems
accessing mortgage credit are preventing many households from
taking advantage,” he wrote in a note today.

The U.S. apartment vacancy rate fell to 4.9 percent in the
first quarter, an 11-year low, according to New York-based Reis
Inc. (REIS)
The vacancy rate for rental homes was 8.8 percent in the
first quarter, compared with 9.7 percent a year earlier, the
Census Bureau said in today’s report.

Home Vacancies

Of the estimated 132.6 million U.S. homes, 18.5 million, or
13.9 percent, were vacant in the first quarter. A year earlier,
about 19 million homes were vacant, according to the report.
That includes homes for sale or rent or held off the market, and
vacation properties used seasonally.

“Both homeowner and rental vacancy rates dropped during
the first quarter, which obviously bodes well for housing,”
because shrinking inventory will boost rents and spur demand for
new homes, Stephen East, an analyst with International Strategy
Investment Group LLC, wrote in a note to clients.

Homeownership may fall further and repossessions may
increase this year as lenders step up foreclosures after a $25
billion agreement by the nation’s largest loan servicers in
February to settle allegations of improper practices.
Foreclosure filings fell to the lowest since 2007 in the first
quarter as banks slowed actions before the settlement, according
to RealtyTrac Inc.

The ownership rate may drop below 64 percent by the end of
2015 and stay there for years, Scott Simon, the mortgage bond
head of Pacific Investment Management Co. in Newport Beach,
California, said in an e-mail today.

“It will be lower by 2017,” he said. “It will be lower
in 2020.”

New Rental Households

About 6 million borrowers will lose their properties in the
next five years because of inability to pay, creating 4 million
new rental households, Simon said in an April 24 interview on
Bloomberg Television.

The homeownership rate fell 3 percentage points from a year
earlier to 61.4 percent in the first quarter for people aged 35
to 44, the biggest drop of any age group. The Northeast had the
biggest regional decline, with the ownership rate falling 1.4
percentage points to 62.5 percent. The West had the lowest
ownership rate at 59.9 percent, down 1 percentage point from a
year earlier.

Ownership Society

The U.S. homeownership rate rose to a record in 2004 when
President George W. Bush, running for re-election, called for
expanding home-loan availability to create an “ownership
society.”
The current rate of 65.4 percent matches the average
since 1965, when the Census Bureau began reporting the figures,
according to data compiled by Bloomberg.

Home prices fell 3.5 percent in February from a year
earlier and are 35 percent below their July 2006 peak, according
to the SP/Case-Shiller index of 20 U.S. cities. The average
rate for a 30-year fixed loan was 3.88 percent last week and
reached 3.87 percent in February, the lowest level in at least
four decades, according to Freddie Mac.

About 2.37 million homes were listed for sale in March, a
and 6.3 month supply and down 22 percent from a year earlier,
the Realtors association said on April 19. A six-month supply is
considered a healthy market, according to the group.

To contact the reporter on this story:
John Gittelsohn in Los Angeles at
johngitt@bloomberg.net

To contact the editor responsible for this story:
Kara Wetzel at
kwetzel@bloomberg.net

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Article source: http://www.bloomberg.com/news/2012-04-30/homeownership-rate-in-u-s-falls-to-lowest-since-1997.html

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