American dream fades for more as homeownership falls
15.11.2010 00:00
American dream fades for more as homeownership falls
By Les Christie, staff writerNovember 2, 2010: 2:36 PM ETNEW YORK (CNNMoney.com) -- Ongoing economic, financial and housing woes continue to hit Americans where they live -- or used to.
A perfect storm of job losses, unaffordable mortgages and plunging home prices have resulted in a steady decline in homeownership over the past five years, according to the results of a U.S. Census Bureau report.
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."
The glut persists even though few new homes are being built. Housing starts are at about 600,000 a year, well below the normal replacement rate. Then again, fewer people are now looking to buy or rent.
"There's not a lot of households being formed," said Newport. "People are doubling up in the same house, immigration has dropped and young folks are living with four or five roommates instead of two or three."
Not surprisingly, regions with the most affordable home prices are seeing the highest rates of homeownership.
For example, 71.1% of Midwesterners own homes, the highest rate of any region. Still, that is down from 73% in late 2006.
Southerners own at a 69.9% rate, down from a peak of 70.8% in 2006; Northeasterners 63.9%, down from 65.5%; and Westerners 61.3%, well off the high of 65.3% seen in the third quarter of 2006.
By age, the highest ownership rate nationwide is for those 65 or older -- 80.6%. The housing bust and foreclosure crisis have hit this group less since many own their homes debt-free. Still, that rate is off a high of 81.5% in 2006.
The effect of the economic turmoil on younger Americans was more profound. For those under 35, 39.2% owned homes last quarter, down from 43.3% at the beginning of 2005, a 9% decline.
For Americans 35 to 44, the rate of homeownership was 65.2% during the third quarter, down from a peak of 70.1% -- a decline of 7%. For 45- to 54-year-olds, the rate was 73%, down from 76.5%, a 5% drop; while 55-to 64-year-olds experienced a decline in homeownership of 3%, to 79.2% from 81.8% at its peak.
#cnnfb_connect {background-color:#f5f5f5;width:auto;height:auto;padding:10px;clear:both;} First Published: November 2, 2010: 12:19 PM ETRight Now
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