According to data released by the U.S. Census Bureau, the first quarter of 2013 witnessed a downward trend in the homeownership rate. The decrease represents the lowest value since 1995. Numbers indicated by the recent release suggest that homeownership plummeted to 65 percent in the first four months of this year. This marks a modest drop from the 65.4 percent homeownership rate from this time last year. Continuation of this downward trend signals that potential troubles may be on the horizon for prospective homebuyers in the current market.
It has proven difficult to pinpoint the exact reason homeownership rates continue to slip, as it is likely a combination of factors. Perhaps the government’s failure to successfully address the mortgage crisis has prevented potential home buyers from taking the next step in homeownership. According to Jed Kolko, a chief economist affiliated with Trulia, “tight credit, tight for-sale inventory, the challenge of saving for a down payment, and more rental single-family supply all helped lower the homeownership rate.”
The homeownership rate, as its name suggests, is representative of the percentage of owners currently occupying a household. To determine the homeownership rate, divide the number of households occupied by owners by the total number of occupied homes. The resulting number will reveal a steady decline in recent years. Our current homeownership rate is 4.2 percent lower than its peak of 69.2 percent, reached in 2004.
Geographical regions throughout the United States demonstrated a variety of homeownership rates. The following percentages represent each region and their current homeownership rate for the first quarter of 2013:
- 59.4% in the West
- 62.5% in the Northeast
- 66.5% in the South
- 70% in the Midwest
Attractive interest rates, nearing record lows, have facilitated the housing sector’s recovery. Market analysts suggest that our current trajectory is pointed in the right direction. However, the same interest rates that are attempting to remove us from this crisis may result in strict lending practices that are preventing many from buying a home.