Posted by: Marvin Remmich | July 20, 2011

Homeownership rates could drop further

The drop in the homeownership rate from an all-time high of 69.2 percent in 2004 to 66.4 percent in the first quarter of 2011 reflects a decline from unsustainable
levels to something closer to historical averages, according to a study
released by the Mortgage Bankers Association’s Research Institute for Housing
America (RIHA). While the homeownership rate may have bottomed out, it could
fall another one or two percentage points because of tightened credit and other
factors, the study says.

Key findings from the
study include:

  • A combination of changes in mortgage credit
    standards and attitudes towards investment in homeownership likely
    contributed to much of the rise and fall in homeownership over the
    decade.  As credit conditions loosened in the first part of the
    decade, many people of all ages who would have remained renters instead
    became homeowners.  With the financial crash, the recession, and
    tighter credit conditions, homeownership rates have fallen back to levels
    close to those of 2000 for most age groups.
  • Individuals appear to have been more
    risk-seeking in their approach to home buying in the first half of the
    last decade.  This changed to a more risk-averse posture following
    the real estate meltdown.
  • Between 2000 and 2009 there was a one
    percentage point increase in the homeownership rate.  But, were it
    not for the shifts in access to homeownership through easier credit and
    the changes in socioeconomic conditions, the homeownership rate would have
    actually fallen between 2000 and 2005, rather than increasing.

To view the full
report, please visit the RIHA website at


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