Homeownership Rate Hits 13 Year Low :: The Construction Management Pro

Homeownership Rate Hits 13 Year Low

The Bush Great Recession has forced unprecedented numbers of homeowners out of their homes, made for a difficult homebuying environment, and tainted many Americans’ ideal of owning a home. The increase in the homeownership rate seen during the housing boom has been more than completely wiped out by the bust.

The Census Bureau says homeownership in the United States has fallen to its lowest level in more than 13 years. The nation’s homeownership rate dropped to 65.9 percent in the second quarter. That’s a full percentage point lower than the second quarter of 2010 and a half a percentage point below the rate recorded in the first quarter of 2011. With nearly 3 million foreclosures in the pipeline, no sign of a major improvement in credit requirements or the labor market, demand for owner-occupied housing is likely to remain weak.

The flipside will be a further increase in the demand for rental housing. This will boost rental rates and bodes well for the multi-family sector, and real estate investors with a buy and hold strategy. In line with the steep declines seen in homeownership, the share of all households renting has naturally increased to a new 13-year high of 34.1 percent in the second quarter. That’s up from 33.6 percent in the first quarter. The rental vacancy rates have fallen to 9.7 percent from a peak of 11.1 percent in 2009, which has driven a recovery in rent prices. Landlords could see rental yields of more than 5 percent over the next few years.

Paul Dales, senior U.S. economist with the research firm Capital Economics says there are 1.9 million homes up for sale that are still sitting empty. He says another 3.9 million homes are empty but, for one reason or another, are being held off the market. The excess supply of housing remains high, and Dales stressed that the combination of weak demand and high supply almost certainly will not translate into higher house prices any time soon.

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