Homeownership Rate Declines to 15-Year Low

From [HERE] The homeownership rate fell in the first quarter to the lowest level in 15 years as more Americans lost homes to foreclosure and shifted to renting amid the weak economic recovery.

Economists say the rate could slip further. While low mortgage-interest rates and falling home prices have made homes more affordable than at any time in the past decade, mortgage-lending standards remain tight. Also, more Americans may feel less confident about property ownership after the steep price declines of the past six years.

The Census Bureau said Monday that the homeownership rate fell to 65.4% at the end of March, the same level as in early 1997. Minorities traditionally have a lower ownership rate and also saw their rates decline in the first quarter. African-American home-ownership rate slid to 43.1% from 45.1% at the end of 2011. Hispanics' rate slipped to 46.3% from 46.6%.

Before the housing bubble of the past decade, the rate grew very slowly. It rose to about 66.2% in 2000 from 64.2% in 1990, according to the federal decennial census. The rate slipped slightly during the 1980s, the first decline in the post-World War II period. It increased by 1.5 percentage points in the 1970s and by one percentage point in the 1960s.

But the homeownership rate rose sharply during the past decade, to a peak of 69.2% at the end of 2004. It has fallen steadily since housing prices began dropping in 2006.

Rental properties, meanwhile, benefited from the drop in homeownership. Only 8.8% were vacant in the first quarter, the lowest level since the second quarter of 2002. The median rent in the first quarter was $721 per month, the highest since the first quarter of 2009.

Meanwhile, the share of non-rental housing that was vacant stood at 2.2%, above a typical level under 2% but still the lowest reading since mid-2006. The falling vacancy rate "bodes well for housing," said Stephen East, a home-builder analyst with ISI Group, because it implies that supply-demand imbalances are narrowing.

The government calculates the homeownership rate by comparing the number of properties with people living in them to the number of owner-occupied properties. It estimates that 74.6 million housing units were owner-occupied in the first quarter, compared with a total of 114.1 million occupied homes.

Compared with the fourth quarter of last year, the rate's biggest decline was in the Northeast, which slipped 1.2 percentage points to 62.5%, according to the Census report.