Comments due by Oct. 8, 2014
THE homeownership rate in the United States plunged during the Great Recession. Many families lost their homes as prices collapsed and unemployment rose.
Now the economy is growing, and there are more jobs than ever. Home prices have risen, although they have not fully recovered.
But the homeownership rate continues to decline.
The Census Bureau reported this week that the rate fell to 64.3 percent in the third quarter, the lowest level since 1994. Since the second quarter of 2004, when the rate peaked at 69.4 percent, the number of homes owned by the people who live in them is virtually unchanged, but the number occupied by renters has risen by nearly 25 percent.
Just why that is — and whether it is a bad thing — is subject to debate.
Before the recession, it was a government goal, promoted by presidents of both parties, to get the ownership rate up. Homeowners were thought to care more, and thus maintain their homes better. They could profit from rising home prices, helping poorer people who bought homes improve their economic status. Changes in lending practices made it much easier for people to qualify for home loans, and soaring home prices made those who still rented appear to have passed up easy profits.
Renting, Not Owning
The homeownership rate — the percentage of homes and apartments that are owned by the occupant rather than rented — has dropped to its lowest level in 20 years. As more families rent, the number of apartments being built has recovered to prerecession levels, while single-family housing starts remain depressed.
Homeownership rate
Seasonally adjusted
70
%
PEAK
2Q 2004
69.4%
68
66
64
3Q 2014
64.3%
62
TIME PERIOD COVERED
BY CHARTS BELOW
60
’80
’85
’90
’95
’00
’05
’10
’14
Change in occupied housing units
since second quarter of 2004
Combined vacancy rate
for houses and apartments
+
25
%
15
%
Rented homes
+
20
14
+
15
13
+
10
12
+
5
11
Owned homes
0
10
’04
’05
’06
’07
’08
’09
’10
’11
’12
’13
’14
’04
’05
’06
’07
’08
’09
’10
’11
’12
’13
’14
Change in housing starts since June 2004
Multifamily starts as a percentage of total starts
Based on 12-month totals through date shown
Based on 12-month totals through date shown
+
25
%
40
%
Multi-unit construction
0
30
–
25
20
Single-family
homes
–
50
10
–
75
0
’04
’05
’06
’07
’08
’09
’10
’11
’12
’13
’14
’04
’05
’06
’07
’08
’09
’10
’11
’12
’13
’14
Whatever the reason — whether many people cannot afford to buy or whether a lot of them now fear the consequences of buying — the result has been a liftoff in rentals. And that has caused builders to put far more effort into apartment buildings than they had in recent years.
Of course, some apartments are sold as co-ops and condominiums, particularly in big cities, and some single-family homes are rented. But few builders build single-family houses hoping to rent them, while many multifamily properties are constructed with rentals in mind.
The accompanying charts show the trend in the homeownership rate since 1980, and the trends in a variety of housing measures since the homeownership rate peaked in 2004. Vacancies leapt in the recession, and while they have declined since 2009, the proportion of vacant units is still higher than it was before the recession began. That fact could be helping discourage single-family housing starts, which remain far below prerecession levels, even though multifamily starts have fully recovered.
In early 2006, less than 17 percent of new residences constructed were in multifamily buildings. Over the most recent 12 months, the proportion is more than twice that.
16 comments:
This article discusses the issue of renting or buying homes. Renting homes and apartments seems to be the new trend in post recession America. This makes a lot of sense to me because many families that lost there home during the recession are not going to immediately buy a new home. They do not have full belief in the economy after the great recession. Because they don't have full belief in the economy they rent home instead of buying them. Once the citizens that were effected by the recession gain full belief in the economy again, then home ownership rates will increase again.
People do not have the money and nor do they want to live in a house all alone, they would rather rent the house out or live in an apartment. It makes so much sense to buy a two or three family house and rent one or two floors to someone else. It brings good income in and it is easier to maintain owning a house that way. Upkeep is a big factor in choosing where to live, it cost a lot of money to heat/cool up a house, some people would rather live in an apartment, where they don't have to put much thought into it. When you pay off your mortgage, you can then sell the house at a higher price, if you made improvements on it and if the home market is doing well.
The debate between buying and renting a home during a current time of recession seems to be an easy decision. Buying a home is a very risky thing to do in a recession due to the fact that one may not be able to currently afford the mortgage, or further in the future. One may be able to afford the expenses of a current recession, but may not be able to if the recession gets any worse. Understanding that everyone wants to own a home, it seems to be the safer bet choosing to rent a home. If times are tough and the ability to afford rent diminishes, people are able to search for less expensive homes that are easier on rent and expenditures. Although this is not the first choice of many Americans, it seems to be the safer one.
During the great recession most American could not buy new houses. Now that Americans have climb out of the great recession homeownership rate are continuing to decline, puzzling many economist. It seems that modern Americans have become content with just living in a house or apartment. Where as the goal for many middle class families in the pre great recession was to own a home. I believe that homeownership rates are now skewed because many young Americans are not settling down having families and buying houses. Instead they are out on the town living it up for as long as they can.
Marissa Cotroneo said..
This article talks about the steady decline of home ownership. Although unemployment seems to be dropping and hope is being restored to citizens, the amount of poeple in the us that own homes is still declining. How is this happening? Well because of the high unemployment in 2007 more people began on renting house and apartments then actually buying them. Because of this big boom in renting and combined vacancies construction companies have been putting more money into houses that can be rented to bigger families , or apartments that can be combined vacancies. This all makes sense to me. We all have not fully recovered from the recession that took place not to long ago. People are still trying to get back up on their feet. Until then the rate of people renting and sharing homes will either increase or stay exactly the same.
This article discusses the decrease in homeownership since the Great Recession and the corresponding increase in the rate of renting apartments.
In post recession America today, after so many families lost their homes, I believe that people fear the potential consequences of buying a new home. When the housing market collapsed, not only did people lose their homes but they also lost their credit. Many people who lost their homes and could potentially be interested in buying most likely are not able to and others just cannot afford to. Additionally today, those that are purchasing homes are purchasing multi-family houses. Though these homes cost more than the average single family home, I believe that these are being purchased as an investment. The rent collected can assist in paying the houses expenses. Additionally, with the more people living in the home, it is easier to maintain the house and its upkeep.
In conclusion, with the way the economy is currently operating and how it has in the past, it is no surprise that renting has increased by 25%. Renting an apartment is the safest way to go; it is less financially risky and more affordable.
This article talks about the peak of homeownership in 2004 and the decline ever since then. The article talks about how homeownership hit its low during the recession. Although we have rebounded better from that low we still have not gotten back to the level of homeownership we were at before the recession started. Also since then the amounts of apartments being rented has risen greatly. Because of the rise in apartments being rented more apartment buildings are being built throughout the country. Also a lot more work is being put into each apartment than ever has been before. Americans are renting a lot more than they are owning these days and that gap may continue to grow in years to come.
This article deals with the difference between renting or buying homes. After the recession, people have been more inclined to rent homes rather than buying them. People now a days do not necessarily trust that the economy will be back to full strength. To combat this, they spend less money on housing by renting out apartments or houses. This will continue to happen most likely until people in America decide to trust the economy again. This will then lead to people beginning to buy houses again.
-Nick Bellantese
The article discusses the difference and the issue between renting and buying a home. In most cases, most of the families are renting their home because it is cheaper and most families can afford it while buying a home is different because one may not be able to afford the mortgage. Due to the recession, most of the families could not buy their own house and it causes a decline in the homeownership rate chart. Even today, buying a house and paying off the mortgage is a tough situation for most of the families that could not afford it.
This article discusses the possible issue of the decline of homeownership in the U.S. after the recession that occurred in 2007. Whether or not this is an issue is a question brought up in this article. Apartments and houses are being rented more than being owned, which isn't beneficial for the amount of poor people who could only afford renting other than purchasing. The goal of the government was to increase homeownership but since the recession that has not been happening. I do believe it is an issue that people are not owning homes because it just shows the poor state our economy is in, however I do believe it is necessary for people to rent homes after the recession. If that is what the people can afford then they must take advantage of the opportunity.
The homeownership rate declined during the Great Recession and continues to decline even though our economy is growing. Americans seem to be more comfortable renting an apartment rather than owning their homes whether because they can’t afford to buy or they fear the consequences of buying. Before the recession, it was government goal to get the homeownership rate up, but it is not happening. We have to consider that the American economy has not fully recover and people will be hesitant to make a big decision as it is buying a house and taking out a mortgage. Only time and continuous growth in the economy may give Americans the confidence to become home owners as it was government goal before the recession.
This article talks about the possible reasons for decline in homeownership in America after the Recession of 2007. Some people prefer renting now as their are fearful of unstable income and scared of the penalties of missing payment . This is understandable as they are not confident of the American economy as it has still not recovered . This is bad as this shows how weak our economy is and that something needs to change so people can trust the economy and start spending confidently again
Karthik Nair
The article is talking about how America has transformed from a buying home country to a renting country. With having single parent homes it makes sense for people to rent apartments. I think another reason is for the reason of the recession. Since the housing bubble exploded people probably don't have faith in the economy. Which leads to no faith in houses. Apartments cost less and if they family isn't big they have the same factors that a house has. The real question is how is how is this going to affect GDP and the economy? After the recession completely ends and people regain their faith, housing will increase and renting will decrease.
Bryan Rivers
In this current economy renting a house would be smarter than buying. There is no trust that the economy is stable enough for an investment of large amounts; renting while being cheaper has a smaller risk factor.
The article discusses the homeownership rate along with a small bit of jobs and buying or renting a home.
Many families were hit hard in the recession and even now that the economy is gaining momentum, with the mortgage rates as they are along with where and how people want to live. Many people see renting their homes as a better option that buying the home with, in most cases, an attached mortgage to buy the home. People who want to buy their homes need a large sum of savings and will probably need a mortgage or a loan of some kind to pay for the entire home, but it will be very taxing on people who continue to take money from the banks and the cycle of debt will not end.
People should understand what living at ones means, under and above ones means are and accommodate themselves accordingly.
Beverly Levine
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