Home ownership hits eight-year lowPosted on
A new study issued today shows that home and rental property prices are rising and new construction is picking up, all signs that the housing market is recovering. However, millions of American homeowners are still delinquent on mortgages or upside down on their loans.
Despite low interest rates, the U.S. home ownership rate fell for the eighth straight year in 2012, from 66.1 percent to 65.4 percent, reflecting a net loss of 161,000 homeowners for the year, according to the report by the Joint Center for Housing Studies of Harvard University.
For each 10-year age group between 25 and 54, the share of households owning homes is now at its lowest point since record-keeping began in 1976.
The study also showed that despite improvements in delinquency rates, more than 3.6 percent of homes were in foreclosure during the first quarter of this year, more than four times the average between 1974 and 1999.
Even as historically low interest rates have helped make the monthly cost of owning a home more favorable than any time in the past 40 years, the national homeownership rate fell for the eighth straight year in 2012, Eric S. Belsky, managing director of the Joint Center for Housing Studies, said in a statement. The drop was especially pronounced for 25- to 54-year-olds, whose homeownership rates were at their lowest point since record-keeping began in 1976.
The study showed that historically low interest rates were spurring a refinancing boom, but that credit constraints continued to hamper new-home sales. The average credit scores of conventional mortgage applicants denied credit in the first quarter of 2013 were 722 for refinances and 729 for purchases.
Tight credit is limiting the ability of would-be home buyers to take advantage of todays affordable conditions and likely discouraging many from even trying, Chris Herbert, director of research at the Joint Center for Housing Studies, said in a statement. At issue is whether, and at what cost, mortgage financing will be available to borrowers across a broad spectrum of incomes, wealth and credit histories moving forward.
The number of Americans shelling out at least half of their income to pay housing costs is at an all-time high at 20.6 million households.
With rising home prices helping to revive household balance sheets and expanding residential construction adding to job growth, the housing sector is finally providing a much needed boost to the economy, Belsky said. But long-term vacancies are at elevated levels in a number of places, millions of owners are still struggling to make their mortgage payments and credit conditions for home buyers remain extremely tight. It will take time for these problems to subside.