Homeownership rate down to its lowest in a decade

The widening gap in the ratio between a low demand for foreclosures and its increasing supply may be pinning the country’s homeownership rate down to its lowest level in more than a decade.

According to statistics released by the Census Bureau, there was no movement at all in homeownership rate for the July-September quarter, which remained static at 66.9 percent, the same rate for the previous April-June quarter. This was only a bit higher than the 66.7 percent homeownership rate posted in 1999.

After decades of remaining consistently within 64 percent range, the rate of homeownership among Americans began to have an upward trend in 1995 and the succeeding years when the Clinton and Bush administration exerted efforts to encourage home buying.

The Democrats believe that Fannie Mae and Freddie Mac should guarantee more loans for Americans within the low-income tier, while the Republicans are addressing homeownership issues by leaning towards opening more subprime lending to borrowers who do not have sufficient credit score to take out loans, despite warnings that loans may have higher than usual interest rates.

The last year that homeownership rate peaked was in 2004, which slowly but steadily declined when the housing bubble burst in 2006.

But the Center of Economic and Policy Research thinks that the belief that a higher homeownership rate is advantageous could just be an assumption.

According to IHS Global Insight, homeownership could further decline and return to levels prior 1995 if lending standards remain strict and the number of foreclosures unabated.

Analysts say that the government may have contributed to the current housing problems by widely opening the market even to those borrowers with poor credit rating and encouraged low down payments. In most cases, it would have been better if people just rented spaces rather than bought homes which they could not simply afford, experts say.

According to a government survey, millions of homes or 14.4 percent of all available houses and apartments, including vacation homes remain unsold.

According to Census Bureau figures, vacancies rose to up to 19 million in 2008 from 16 million in 2006. There are already around 131 million housing units across the country and a million more projected home seizures.