Back in 2004 as a result of Fannie Mae (mostly) agreement to buy sub prime mortgage loans, the home ownership rate reached 69+% for a short time. When all the bad paper collapsed, that quickly went back down to below the historical rate of about 64%. Now some of the ankle biting doom sayers are yelping that this means home ownership is no longer important. As they used to say on an old, old very popular radio show, “TAINT SO MCGEE”. ($10 Starbucks card for the first person who gets back to me with the correct name of the radio program.
The U.S. Census Bureau recently released their 2019 Q2 Homeownership Report. Some began to see the sky falling, believing the report showed Americans may be stepping back from their belief in homeownership.
The national homeownership rate (Americans who owned vs. rented their primary residence) increased significantly during the housing boom, reaching its peak of 69.2% in 2004. The Census Bureau reported that the second quarter of 2019 ended with a homeownership rate of 64.1%, which is down from the 64.8% rate for the fourth quarter of 2018. Based on this news, some started to question the consumer’s belief in the idea of homeownership as a major part of the American Dream.
Everyone Calm Down…
It is true the homeownership rate did fall. However, if you look at the national rate over the last 35 years (1984-2019), you can see that the current homeownership rate has returned to historical norms. The 64.1% rate is equivalent to the rates in 1984 and 1994.
What Will the Future Bring?
Part of the reason the homeownership rate slipped is a lack of inventory available for purchase for first-time home buyers. The demand is there, but currently, the supply is not. It seems, however, that is about to change.
In a recent report, Ivy Zelman explained that builders have finally started to increase the number of homes they’re constructing at the lower-end price points:
“Robust growth in the entry-level price point of late should translate to a reacceleration in homeownership rates moving forward.”
Today, the homeownership rate sits at historic norms. In all probability, it will increase as more inventory becomes available. There is no reason for concern.
If you would like to see how home ownership can fit into your life style and will accelerate your wealth accumulation and net worth, please call or text to 484-574-4088 and lets set up a time to talk.