Home Ownership Hits Lowest Levels Since 1965

10 Aug

black wealth, african american wealth, home ownership

By JasmineHughes

According to a recent Morgan Stanley report, the United States is fast becoming a nation of renters. As the foreclosure crisis continues to gain momentum homeownership is reaching its lowest numbers in almost 5 decades.

Last Friday, the Census Bureau reported that the percentage of people who owned a home had dropped to 65.9% during the second quarter, its lowest level since the first quarter of 1998.

Yet, in a research paper issued a week earlier, Morgan Stanley analysts Oliver Chang, Vishwanath Tirupattur and James Egan argued that the home ownership rate is even lower than the Census Bureau statistics say.

In fact, once they factored in delinquent mortgage borrowers (the ones who are likely to lose their homes at some point), Morgan Stanley calculated that the home ownership rate is more like 59.2%. That’s the lowest level since the Census Bureau started keeping quarterly records back in 1965.

In addition to the millions of people who have lost their homes to foreclosure, Morgan Stanley said that another reason for the decline in home ownership is that many of the people who would like to buy home can’t get a mortgage.

The private mortgage market has dried up and even the government-supported organizations, like Fannie Mae and Freddie Mac, have tightened their underwriting standards, starting October 1rst they are making it more expensive for riskier home buyers to borrow and reducing their maximum lending amount.

“For the first time in recent history, the government is no longer promoting home ownership for all Americans, leading to a reconsideration of housing-related public policy,” said the Morgan Stanley paper.

In a February housing finance report, the Obama administration stated that its goal was to “ensure that Americans have access to an adequate range of affordable housing options. This does not mean our goal is for all Americans to be homeowners.”

The government wants to encourage private capital to fill the gap, but currently, Fannie and Freddie, along with loans from the Federal Housing Authority, account for about 90% of all mortgage lending these days.

In light of these changes, Morgan Stanley points out that there are a few benefits to renting. For example, renters are much more mobile, they can move to take a better job if the opportunity arises and more often than not, renting is cheaper than buying. If renters are disciplined about investing their savings, they can come out with more wealth than buyers.

Even if this is the only option or last resort for some, Morgan Stanley authors say, “rentals have become a much more valued housing option.”

About jasminesnroses

Hello World. I’m a recent graduate of Rutgers University, trying to make my mark. I have many interests, curiosities and ideas. All of which can be found here. So stick around =)

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7 Responses to “Home Ownership Hits Lowest Levels Since 1965”

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