According to John Burns Real Estate Consulting, home ownership could fall to 62% by 2015, a level not seen since the Census began tracking this statistic in 1963. The effects of foreclosures could drop home ownership in America by 5.6%, and these never-ending cycles, like tight mortgage credit and weak consumer confidence, add another 3% drop. Demographic trends will only add a dismal 0.7%.
What was once considered the American dream, home ownership is now viewed by many as too much of a long-term commitment. If a family was “burned” by home ownership in any way, (foreclosure, hard-to-sell home, unable to move because of inability to sell home, short sale complications, etc.) the tendency will be to stick with renting for the foreseeable future. In addition to long memories, many of these situations damage a home owner’s financial picture: damaged credit and depleted savings can hinder qualifying for a mortgage.
John Burns of John Burns Real Estate Consulting predicts it may be 2025 before home ownership is “recovered” to a stable 67%, when previously foreclosed borrowers are able to return to the housing market and cyclical trends improve. Burns does not, however, mention negative equity anywhere in his predictions.
Of course, as home prices fall, negative equity increases.
The question is posed: is a home ownership of 62% a bad thing? Sure, it’s been higher in America before, but 62% is still much higher than most European countries, according to CNBC.
Home ownership is driven into our minds as the “American dream”, but the buying and selling and building of homes creates jobs for Americans, and greatly helps the economy. If we lose even small percentages of this giant job-creating industry, that can’t be a good thing.
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