Is the American Dream dying? Number of home-owning Americans drops
The reason for the deterioration? Exactly what you'd expect.
"The record foreclosure rate has thrown countless Americans out of homeownership, while high unemployment is preventing many from getting in the door," says Andrew LePage, an analyst at San Diego-based MDA DataQuick, a real estate information company.
Add to that unobtainable mortgages and lack of confidence in the long-term prospects for the country's economic health, and potential buyers evaporate. Still others are waiting for prices to decline further.
Not surprisingly, the cities with the lowest-priced homes enjoyed the highest rate of homeownership last quarter, such as Youngstown, Ohio, and Detroit, Mich. Midwesterners own at a 71.1% rate; Southerners at 69.9%; those in the West at 61.3%. Older Americans own homes at a higher rate -- 80.6% -- compared with those younger than 35, who owned at a rate of 39.2% in the third quarter, down 9% from early 2005.
Julia and Gus Estrada have saved enough money for a down-payment on their first home, but won't jump into the market until the spring, assuming they both hold onto their jobs. Julia is an elementary-school teacher and Gus is a plumber.
"We're not budging until things stabilize," says Julia, 28. "I'm pretty new at my job and I want to make sure I'll still have it and can afford the monthly payments."
Not a bad idea, given the record number of foreclosures nationwide. The number of empty, owner-occupied homes held at 2.5% in the third quarter, according to the census report, unchanged from the second quarter this year. That's a big bump from the vacancy rates mid-decade, however, which were below 2%.
Where are former homeowners living, post-foreclosure? Some are finding alternatives to homeownership and the typical rental scenario.
"In a weak economy, people double up with family and friends in apartments or homes, keeping the rental vacancy rate high," says LePage. "In a robust economy, when jobs are plentiful and people are optimistic, they're ready to spend money and settle into a place."
The vacancy rate inched down to 10.3% in the third quarter, from 10.6% three months ago, a far cry from the 9.9% vacancy rate in 2008.
Will a wave of homeowners hit the market any time soon?
"Foreclosure victims will be out of the market for years," says LePage. "Their credit history is affected. It doesn't bode well for higher homeownership rates in the future."