U.S. Census Finds Worst Housing Crisis Since the Depression of 1929

The rate of homeownership last year dropped to 65 percent

The American home ownership dream has felt its largest decrease since the 1929 Depression, according to a new 2010 census report released on Oct 6, 2011. The Census Bureau analysis discovered that the rate of homeownership last year dropped to 65 percent. Although that rank remains the number two highest in a 10 year rate, analysts believe the U.S. may never get back to its middle-decade housing peak in which almost 70 percent of households were owner occupied.

Why?: a longer economic reality of prolonged job losses, tighter credit, and reduced government loan involvement. Non-working young adults are the most unlikely to own property, putting off first-time home buying and living with their parents. Hardest hit are 35-64 middle-aged adults, primarily homeowners going into bankruptcy or mortgage foreclosures after the 2006 housing bust, have their lowest home ownership levels in several decades.

Looking at the picture racially, the home ownership gap between blacks and whites is at its widest spread since 1960, obliterating over 40 years of gain. The changes going on boggle the mind. there's a total crash of the housing market while attitudes with regard to housing are moving from being owners to tenants. 10 years ago home ownership was the Great American Dream, Now, I'm not so sure everyone still thinks that way.

The new-reduced roles of mortgage purchasers, Freddie Mac and Fannie Mae, with government urging for decades, assisted in enabling loans to mortgage borrowers with less than perfect credit, a lot of of them being minorities. Earlier this year, the Obama administration made a shift from a long standing government focus on encouraging homeownership for everyone and instead began steering low income people toward renting. Additionally Congress has been mulling over eliminating the federal home-mortgage interest tax deduction, a popular inducement to buying a home that's been available since the early part of the 20th century.

Because of depressed housing prices that that just might carry on for another four or five years, it makes more sense now in a majority of cases to rent rather than own.

The nationwide homeownership rate dropped to 65 percent, 76 million owner occupied housing units -- down from 66 percent in 2000. This 1.1 reduction of percentage points becomes the greatest since 1940, as homeownership nose-dived 4.2 percentile points in the 1929 Great Depression down to a low 43.6 percent.

Since 1940, the sheer number of Americans living in their own homes had perpetually increased in each decade due to regularly booming economic times, favorable laws on taxes and trouble-free financing. A single exception being 1980-1990, as ownership stayed put at 64 percent.

Looking at these figures by state, there have been 41 states that have seen home ownership reductions since 2000, many in the Southern and Western states where foreclosures became more widespread. Florida, South Carolina, Alabama, North Carolina, and Mississippi led the way. On the opposite end of the housing scale, those states having greater vacation homes shares owned by baby boomers with money saw minor home ownership increases, including Hawaii, New Hampshire, Vermont and Alaska.

The U.S. housing predicament is far worse off than those in most industrialized Western nations, which, dissimilar to the U.S., didn't foster subprime lending markets to encourage homeownership. The U.S. continues to retain a relatively high homeownership rate, exceeded only by countries like Ireland, Spain, England and Australia.

A strong social pull still exists within the U.S. toward owning a home, because in a normal economy it's always been a way to create equity and net worth. However with thousands of former homeowners now tenants, that dynamic has clearly changed: There's renewed focus upon rentals, and on fresh opportunities for households with low-income to create some sort of wealth. Blacks, on a whole with less income and higher rates of unemployment over other groups, were especially hard hit by the bust in housing. Their rate of homeownership dropped from 46 percent during 2000 to currently 44 percent. Amongst whites, the rate fell off just a little, 72.4 percent down to 72.2 percent. White people have now on average become 1.63 times more probable to be homeowners than blacks, the largest spread since 1960.

Looking at all minorities, U.S. homeownership rose just a little during the past decade up to 48 percent over the previous 47.4 percent, increased by more home purchasing among the younger groups and increased population of Hispanics. Hispanic homeownership grew up from 45.7 percent up to a new 47.3 percent.

Almost 44 percent of every tenant U.S. tenant are minorities, as compared with just 22 percent who are homeowners. State by by state, minorities comprise of more than 50 percent of all tenants in just 10 states plus the District of Columbia, increased from 6 states in 2000 -- the additional states being New Jersey, New York, Mississippi, New Mexico and Louisiana.

"There is no doubts that a huge portion of the white vs minority economic division is exhibited in the disproportionate representation of minorities among the tenants in the nation, The recent financial disaster, which included huge subprime loan units made to African Americans, widened by a dramatic margin, the white vs black homeownership difference. said William H. Frey, who analyzed racial data, a Brookings Institution demographer

New Article Oct 11, 2011

Real Estate Finance