Home Ownership Drops, Rentals Become Hard To Find
The New York Times has a snarky article on homeownership and the inability of the country to maintain the levels of 2005. George Bush tried to raise the level of homeownership and lenders extended money to many who were not positioned to pay these loans.
We have seen what happened.
The ugly truth is that there is a part of the population that is a rental class. The rigors of home ownership, the risks, and the cost make it inadvisable for these people to own. And that is not a bad thing. While home ownership is a noble goal and the American dream, it is also a great deal of work.
And when people who have rented their whole lives and are in a no money down loan, they still feel like they are renting. It is not as if they saved for 5 years for a down payment. Instead they drove around on a Saturday, saw homes for sale with large signs out front offer 100 percent financing and everyone qualifies.
And people bit on it. Big time. But once the roof started leaking and the washer broke, the cost of ownership became too high. Instead of quickly moving to a cheaper apartment when Joe got laid off, they had a adjustable rate mortgage resetting.
And the bank started to call.
This story is being played out across the nation. The grand experiment in home ownership has just about played out. We now need to absorb this inventory and move on a little wiser and little more humble. The lesson the real estate industry has learned is this:
Nobody wins when we put people in a position to fail over the long term.
Many of the new renters, meanwhile, are struggling to get into decent apartments as vacancies decline, rents rise and other renters increasingly stay put. Some renters who want to buy homes are unable to get mortgages as banks impose stricter standards. Others remain reluctant to buy, anxious that housing prices will continue to fall. via NYTimes.com.
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Comment by Santa Barbara Real Estate Voice on 4 July 2008:
We have experienced a very tight rental market here in the Santa Barbara CA area over the years. Now with many buyers sitting on the sidelines as the market has cooled and/or people losing out on their homes, the market is that much tighter. Even with the cost of housing high in our are, people enjoy the lifestyle Santa Barbara provides and still want to live here.