America’s homeownership rate has been declining since 2006, reaching a 51-year-low this spring when it sank to 62.9%.
That number has since increased to 63.5%, and some economists believe this small rise signals a new era of homeownership.
“I think the long slide, which began with the housing bust back 10 years ago, is over,” says Moody’s Analytics economist Mark Zandi.
“For me the big reason to be optimistic is looking at household formation,” says Trulia economist Ralph McLaughlin. Of the 1.1 million households formed during the third quarter, nearly half were owners (not renters) and more than 30% were first-time buyers.
Let’s keep in mind that today’s homeownership rate (63.5%) is just 0.2% higher than it was a year ago (63.7%), and this quarter’s slight increase isn’t statistically significant.
“When you have something that has essentially been in decline for 10 years, one quarter isn’t enough to tell me that we are even stabilizing,” argues Deutsche Bank economist Joseph LaVorgna.
The mortgage crisis should not have been a surprise.
We outlined why the Democratic Party is largely responsible for the housing bust and the resulting financial collapse in a previous article, but in reality neither party should have been surprised.
The Community Reinvestment Act, passed in 1977 with heavy support from the Clintons, forced banks to make loans in depressed areas in order to increase homeownership. This practice ballooned as time went on and banks were forced to make increasingly risky loans (this is a socialist approach to solving a problem; socialism can never and will never work).
Both Republicans and Democrats should have seen what was about to happen: a minor downturn in the economy, a slight upturn in interest rates, a widespread collapse … and now we are at a historic low in homeownership with economists getting excited when rates increase by less than 1%.
Editor’s note: I don’t think our politicians have yet learned…