Home ownership is down to it’s lowest level in a decade.
We should be happy.
This is going to sound antithetical to most real estate industry folks, but it is the truth. Home ownership is not designed for everyone, and for many it is a curse not a blessing.
The cost of a home is more than just the mortgage. Property taxes, repairs, maintenance, and insurance are costs that add up for the homeowner. When a lifelong renter buys a home they have never had to worry about these costs, they were always “included in the rent.”
The landlord typically had a strong cash position on the property so that the other costs could be absorbed in the rent and still be profitable. But for the lifelong renter who now owns the property these costs can be overwhelming.
Social programs coming from Washington and supported by Fannie Mae and Freddie Mac created the concept that improving home ownership was a right and a noble goal for all of us. But as the meltdown of the real estate market has shown, it has been a devastating blow for millions of families.
So as the home ownership levels regress back to their traditional levels, celebrate and do not mourn the transition.
It truly is better for all of us in the long run.
Nearly 3 million fewer Americans now own homes compared to the first quarter of 2005, when homeownership peaked at 69.1%, the Census Bureau found. During the third quarter of 2010, the homeownership rate was down to 66.9%, unchanged from a quarter earlier. That’s the lowest rate since the second quarter of 1999.
Meanwhile, a great number of homes sit empty. For owner-occupied homes, the vacancy rate remains at 2.5%, the same as in the second quarter, but well up from the sub-2% levels seen mid-decade.
For rental properties, the vacancy rate actually dropped in the third quarter, to 10.3% from 10.6% three months earlier. But that’s still up from the 9.9% rate of 24 months ago.
“There’s a big inventory glut out there and it’s probably worse than reported,” said Pat Newport, an analyst with IHS Global Insight. “The data is muddled because they don’t account for foreclosures not for sale.”