Homeownership Drops to Near 50-Year Lows
According to industry projections, millions of homes spiraling toward foreclosure are putting homeownership in jeopardy of its lowest level in 50 years, reports USA Today.
By 2012, the rate could fall to 62 percent, roughly equivalent to 1960, when the level of homeownership plummeted to 61.9 percent.
Though statistics show that homeownership has been on a gradual decline since the housing bubble burst in 2006, the new estimates are a considerable drop from where things currently stand. In the second quarter of this year, the rate dipped to 66.9 percent, the Census Bureau says.
So, is homeownership wilting because we can't afford it -- or because we no longer want it?
The impending housing recovery and expected foreclosures top the list, when explaining the sinking homeownership rate.
Millions more homes lost to foreclosure will create a shadow inventory and further drag down homeownership rates, said John Burns, CEO of John Burns Real Estate Consulting. He predicts that 6 million of the 8 million Americans underwater on their mortgages will lose their home to foreclosure over the next two years.
Other data is in step with these estimates, which will likely continue without a significant change in economic conditions.
According to the foreclosure data service, RealtyTrac, foreclosure filings could exceed 3 million by the end of the year, based on the current pace -- which is up 8 percent in the first six months of 2010 compared to the same period of 2009.
Another factor is the heightened measures required to secure a loan, which has made it more difficult for prospective homebuyers now, compared to four or five years ago. Not to mention that the tax credit for first-time homeowners, which helped spur new buyers over the past couple of years, has ended.
However, changing demographics are also playing a role. For example, baby boomers' children who, as adults, choose to rent or live with their parents because of financial insecurity.
But even as homeownership dwindles from its peak of nearly-70 percent in 2004, it's still viewed as a financially prudent by a majority of Americans. In fact, two-thirds of Americans believe that owning a home is a smart investment for the long-term, based on Fannie Mae's 2010 National Housing Survey.
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