Home Ownership Story

by Jay Pestrichelli on May 15th, 2013

Although this isn’t one of those data points we track on a regular basis at Buy and Hedge, I saw an interview on CNBC that made me pay attention. It basically illustrated that home ownership rates in the US continue to decline.  Here’s the chart that peaked my interest:
Most of the interview was about lending standards and credit score requirements. However, on a personal level, this topic hits close to home, as I’m in the process of moving and buying a new home. Here is the interview if you’re interested: CNBC Clip Link
After seeing this, I pulled up the latest Department of Commerce report from April 30th on the subject.  Here is the link to the full report. Residential Vacancies and Home Ownership Q1 2013

The data shows that indeed we are at the lowest levels of home ownership in the US since the 3rd quarter of 1995. This downward trend exists in spite of the general trend of dropping housing prices and rising rental rates.  Oh yea, add to that historically low mortgage rates driven by the Fed QE programs.
We’re all familiar with the notion that recoveries are led by real estate rebounds. This is some of the reason why the Fed is so active in keeping interest rates down.  But what surprised me most was the apparent lack of impact it has had in home ownership since the peak in 2005. After seeing this, I’m not sure why many think the bottom is in on the housing market. I understand prices are turning in recent months, but it seems to me that it will take a migration of the renters to become owners to move the needle here significantly, and that trend is only going down. 


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