Why Today's Homeownership Numbers Could Change Your Life

By
Mortgage and Lending

Homeownership rate hits a 10yr low.....Today The Census Bureau released its survey of residential vacancies and homeownership for the fourth quarter of 2010. Every quarter the census bureau releases it's backward looking report to give us some information on homeownership in the country and how it compares to a year over year number. The report covers data by region, age, race, and income levels.

 The report covered the following:

The total of all housing units for the 4th Quarter of 2010 was 130.85 million, up slightly from the same time period of 2009

The number of owner occupied units: This total number came in at 74.8 million

The number renter occupied units: This was 28.8% of the total of the total housing units

The number of vacant homes: This is 18.39 million (we need help on this one)

Homeownership is down which means rent inflation could be on the way up.Reason being; so many more people are renting so you have less and less rental properties and landlords know this and therefore can boost up the rents a bit. This may lead to an increase in sales in multi-family inventory, at least we can hope so. This maybe the only positive in the report. Tighter lending policies means it's harder to qualify for loans so and many have turned to renting as a necessary alternative. I'm afraid that this could start to create a larger problem. If you have looked closely at your supermarket bill lately you will notice that food prices are are on the way up. This is a world wide phenomenon and part of the reason we have had the civil unrest in many countries as of late. Now I'm not saying we are the next Egypt but take a step back and look at things for a minute.

Gas prices are on the way up

Food prices are on the way up

Unemployment is still above 9%

I hope like the rest of us that the strength of the American Spirit will allow us to generate the industry to pull ourselves out of the mess we have created. The very real fear is not these daily economic reports or data points, its the reality that world is changing around us. We as Americans think we are safe in our little bubble, but what happens when counties like Spain have 20% unemployment, wheat prices are up 28% over last year, and corn prices are up 37% over last year. Not to mention oil prices are now over 90$ a barrel.

This in large part can all be traced back to our country and our housing crisis. We exploded with housing growth and banks created investment vehicles with credit default swaps and other exotic investment vehicles that were bundled and sold around the world as an unknowing house of cards. It worked like this, Joe borrowers $50 from me and I'm worried he might go broke and not pay me so I go to Julie and ask her to insure that debt and she does for $5. Well that $50 debt was the housing market and when the values went down that debt had no collateral and Julie or AIG could not insure the debt.

We then come in and pump the banks full of hundreds of billions to save our tails. The problem is that this has led to inflation around the world, not the same inflation that we are used to seeing but a scarier inflation in the shadows. Our quantitative response to the housing crisis can be argued to the point that it's causing these food inflation's. We know the credit crisis caused "The Great Recession", high unemployment, and full circle to the start of this article higher rental numbers.

 On the surface the Homeownership Report can be read as a simple census quarterly report. Analysts and housing experts will have their say to the relevance of the numbers to the housing market. They will say it's good or it's bad. But if we step back and look at in terms of a global report. A report that has families struggling to find the landlord willing to rent to them after their credit was destroyed by the side of effects of a banking crisis. A report that shows rental inflation, as a side effect of Wall Street's greed. As a report that could work against all of us with higher food prices, it leads me to my hope that we look for answers. The answers to all these problems is not more money for this program or that program. The answer has to be in the way we think as human beings. We need to change the we think as human beings. This was a HOME CRISIS, not a HOUSING CRISIS.

Posted by

 

John B. Saari


 

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Re-Blogged 1 time:

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  1. Donald Bradbury 02/01/2011 08:05 PM
Location:
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Rainer
49,301
Mark Quaintance
Windermere Real Estate - Utah - Draper, UT

I am working with several people right now on investment properties.  Thanks for the post.

Feb 01, 2011 01:28 PM #13
Rainmaker
174,672
Ken Patterson
TPR Properties - Rocklin, CA
Roseville Real Estate, TOP Rocklin Realtor

Interesting information and view point John.  Thanks for sharing!

Feb 01, 2011 01:35 PM #14
Rainmaker
151,433
Aaron Seekford
Arlington Realty, Inc. - Arlington, VA
Arlington VA Homes 703-836-6116

Time to go buy a few properties and start renting them out. Rent is jumping in our neck of the woods, and landlords are making some serious dough.

Feb 01, 2011 02:44 PM #15
Ambassador
1,591,325
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

John, the move does go from loss of job or distressed home loss to rentals. It is a natural migration. Healthiness of the economy whenever that happens will reverse it back to MORE home ownership.

Feb 01, 2011 02:44 PM #16
Rainmaker
316,672
Michael Russell
Keller Williams Realty Partners, Inc. - Overland Park, KS
Overland Park Kansas Real Estate

Some people are meant to be renters and there is nothing wrong with that. 

Feb 01, 2011 03:11 PM #17
Ambassador
1,294,888
Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

I've been watching the news closely and reading the reports about food and commodity inflation. This is a scary time in America and the rest of the world too.

Feb 01, 2011 03:23 PM #18
Rainmaker
111,560
Richard Acree
HABITEC Home and Building Inspections, LLC - Franklin, TN
Home Inspections - Nashville TN

Great information about the home ownership versus rental question.  One component of the rent vs own question is the issue of responsibility of the owner/landlord to protect their Client, the renter.  Requests for home inspections by HABITEC in Middle Tennessee of homes that are for rent should rise as more homeowners become home renters as well.  The liability these landlords will shoulder can be reduced with a documented home inspection report.

Thank you,

Richard Acree

HABITEC Home and Building Inspections, LLC (Nashville, TN)

http://habitecinspections.com

Feb 01, 2011 07:09 PM #19
Rainmaker
161,200
Ryan Case
SCA Real Estate - Anaheim, CA
877-828-0710

I like your blog background :) Congratulations on the feature post!

Feb 01, 2011 08:09 PM #20
Anonymous
Anonymous

Great post. Very informative!

Feb 01, 2011 09:02 PM #21
Rainmaker
409,955
Michelle Francis
Tim Francis Realty LLC - Atlanta, GA
Realtor, Buckhead Atlanta Homes for Sale & Lease

John, 

Interesting post.  On the one hand, over the last two decades we've put folks in homes that really didn't have the buying power to sustain the purchase with government programs.  We need to have some reasonable rules about if folks are qualified to buy and STAY in the homes.  

While I'd like to see home ownership as high as possible, it may have to go down for a while for folks to regroup.  I do a lot of executive rentals and we are seeing a large number of folks who could buy choosing to rent out of fear of where the market is going.  There was a great blog post a while back that said a strong rental demand will increase home buying when the numbers make sense and the fear of uncertainty recedes. 

It's got to make good sense and we are not there yet.  

All the best, Michelle

Feb 01, 2011 09:40 PM #22
Rainer
235,202
Carla Morin
Brookfield - Peoria, AZ

I'm hoping to see some better news soon.  We have to start to come out the other side sooner or later.  I hope we don't have to see a lot more bad times before we start to recover.

Feb 01, 2011 11:17 PM #23
Rainer
10,998
Kenny Gays
RE/MAX Eagle Wears Valley TN - Pigeon Forge, TN

If this housing bubble has thought us anything it is to live within your means. It kind of makes me mad that I purchased a modest home with a low mortgage and can pay it even as a realtor but people who went crazy with the big homes are getting mortgage help, loan modifications, principal reductions, etc. I just hope people have learned from it and realize that 4 walls and a place to sleep is all you really need and stop trying to project an image that doesn't exist. If every one stepped back one or two levels in the price of the home they buy we should never see things like this again.

Feb 02, 2011 11:38 AM #24
Anonymous
Elena Martinovici

True, not everyone can be a homeowner, and some people need the mobility.

Rents have been  very low for several years now!  Renters were taking advantage of the owners that had to rent low jsut to get something for their investment homes. Now that those owners are no longer willing to carry upside down mortgages and pay to have the tenants live there for half the true cost , they see that now they have to pay the true rate of living in a  nice home/ area.  or else they can downsize as well... I have prospective tenants asking how come they can't find the same deal as they did 2 years ago on rentals. I tell them the same thing.  Because the owners have let those homes go to short sale or foreclosure and are not willing to pay for something that is not worth it.

Same time for those that can buy maybe this is the time to buy!

 

 

Feb 02, 2011 12:04 PM #25
Rainer
26,391
R Grodin
Worland, WY

 1.Region 2.Buyer Finances 3.Market 4.Expectations

 

Feb 02, 2011 06:22 PM #26
Rainmaker
859,389
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
your real estate writer

In our area many of the small rental homes were sold just before the bubble burst - reducing the number of rentals available here. Now many of those are in foreclosure - to be purchased by new investors who will turn them back into rentals?

Feb 03, 2011 12:09 AM #27
Rainer
100,523
Thomas Cruse
DataQuick - San Diego, CA
Product Manager at DataQuick

11% of all USA residential properties are vacant - an unprecedented level. And, bank "shadow inventory" is estimated to not be cleared for another 4 years. Someone has to live in all these homes...

...or will we just start bulldozing?...

Feb 03, 2011 05:42 PM #28
Rainmaker
1,286,370
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

This is a great post and confirms what I have been telling my investor clients.

Feb 03, 2011 08:11 PM #29
Anonymous
Anonymous

Greed of a few affects many.  It is sad that so many people have to suffer when they had no control over the BIG BOYS actions.  Kind of like putting the wolf to guard the henhouse.  Great post!

Feb 03, 2011 09:00 PM #30
Rainmaker
364,758
Kathleen Cooper
Kathleen Cooper, Best Option-EXIT Realty Partners, REALTORĀ® - Worcester, MA
EXIT Realty Partners - Broker, REALTORĀ®

Great post John!  Tried to share via re-blog, but the site is not allowing that.  Will definitely come back when they've fixed that and share with my readers.  Keep up the great work! 

Sincerely,

 

Kathleen

Feb 04, 2011 09:39 AM #31
Rainer
50,384
Ann Bellamy
Hard money lending for investors in NH and MA - Tyngsboro, MA

Well, all real estate is cyclical, including rents.  Actually, civilization is cyclical, they rise and fall also.  I'm ok with optimizing higher rents, because I sure have to suffer through the vacancies when the rental market tanks.

Thanks for the post.

Ann

Feb 05, 2011 10:29 AM #32
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