Homeownership rates down in 2012, but optimism persists
by Peter Miller
Fewer and fewer Americans are homeowners these days, according to the Gallup Poll.
People who describe themselves as homeowners reached a peak in 2006 and 2007 when 73 percent said they were property owners, according to Gallup. For 2012, the self-reported ownership rate dropped to 62 percent.
Ownership decline is understandable
RealtyTrac reports that nearly 1.9 million properties received foreclosure filings in 2011. Individuals who have lost their homes through short sales or foreclosure auctions lack the credit to become homeowners again. This reality explains one part of our declining ownership trend.
Another reason for less ownership concerns the growing number of young people who continue to live with their parents well into adulthood. You can think of this as multi-generational housing, but it’s also a tremendous change compared with the past few decades when the goal of virtually every young adult was to get a place of their own. To be fair, the driving force behind the growing number of multi-generational households is the economy, rather than a fear of living out on one’s own.
Americans remain optimistic
Despite the ownership decline over the past few years, Americans are optimistic when looking toward the future.
“Most Americans recognize that now is likely a good time to buy a house,” wrote Dennis Jacobe, Gallup’s chief economist. “Mortgage rates remain at historical lows and Federal Reserve policy seems determined to keep them low for some time to come. While recent Case-Shiller measurements show home prices declining, about one in three Americans expect house prices to increase over the next 12 months and another 44% expect prices to remain unchanged. Relatively stable prices and low interest rates would seem to make buying a house extremely attractive in many local housing markets.”
Such optimism seems difficult to explain given that home values are now 19.4 percent below their peak in April 2007.
“Today’s housing price expectations differ sharply from those during the housing price boom,” wrote Jacobe. “In 2005, 70% of Americans expected house prices in their area to increase, while 5% expected them to decrease.”
While optimism during a time of rising prices is not surprising, today’s outlook is difficult to explain. There are signs of improvement, especially in some local metro areas, but 2012 is not yet half over. The real test of the housing sector will start during the next few weeks as the traditional selling season is underway nationwide.
The National Association of Realtors said last week that “pending home sales increased in March and are well above a year ago, another signal the housing market is recovering.”
According to Lawrence Yun, the NAR’s chief economist, “the housing market has clearly turned the corner. Rising sales are bringing down inventory and creating much more balanced conditions around the county, which means home prices will be rising in more areas as the year progresses.”
No one really knows that prices “will” be rising or that we have turned a corner. We’ll have to wait and see.
