According to the most recent report released by the census bureau, the homeownership rate is 65.5%, but John Burns Real Estate, a research firm, claims that a more clearer picture of true homeownership rate is one that included all borrowers who were 90 days or more delinquent on their mortgage and therefore at high-risk of default. Reports by the firm show this figure to be 62.1%
On a regional basis, the Northeast, Midwest, South and the West all posted lower homeownership rates in the first quarter than a year earlier. The Midwest had the highest homeownership rate at 69.5 percent, while the West had the lowest at 59.9 percent. Americans 65 years or older accounted for the highest rate of homeownership during the quarter at 80.9 percent, a rate that has held quite constant since 2006. Perhaps more disturbing was that as the number of new home formations decreases, those under 35 represented the smallest group of homeowners, with a homeownership rate of 36.8 percent. That's down from 37.9 percent a year ago. As reported by the Bloomberg news, some experts expect that the home ownership rate, as measured by the census bureau, may drop below 64 percent by the end of 2015 and stay there for years.
While mortgage rates have been at their lowest and home affordability has been at it highest, there have been ongoing issues for buyers trying to access mortgage credit as banks have tightened requirements over the past five years for those seeking loans to purchase homes. Also, as the National Association of Realtors (NAR) report in April, rising foreclosures have displaced borrowers, while a lack of inventory has kept home sales from accelerating.
Therefore, it will be interesting to see in the near future, if the positive outlook on the housing market that we have been experiencing translates to an increase home ownership or if the tide of short sales and foreclosures drives the rate lower.
Michael Hobbs, PahRoo Appraisal & Consultancy