A fading dream? Homeownership plummets

This post comes from Marilyn Lewis at MSN Money.

Figures newly released from the 2010 Census show that homeownership in the U.S. fell to 65.1% in 2010, The Associated Press reports. A headline in the Washington Post calls homeownership a "fading American dream."

Together with new data showing fitful progress in rates of missed mortgage payments, foreclosures and home loan modifications, the overall picture is one of a housing market locked in a serious and stubborn stall.

In 2000, 66.2% of Americans lived in homes they owned. The drop of 1.1 percentage points between 2000 and 2010 was the largest since the Great Depression.

That decrease is unmatched in American history except for the decade from 1930 to 1940, when it suddenly dropped 4.2 percentage points, to 43.6%, AP says.

More losses undoubtedly have been incurred this year.

Rate still high compared with those of other countries

Yet the current rate of homeownership is still comparatively high -- the second highest on record, after 2000, the Census reports.

Post continues below.

American rates tend to be higher than most countries. According to Prof. Michael Lea, the director of The Corky McMillin Center for Real Estate at San Diego State University (quoted in this MSN Real Estate article), other nations with high rates are:

• Ireland: 74.5%
• Australia and the United Kingdom: 70%
• Canada: 68.4%
• Japan: 61%

Homeownership peaked in the U.S. in 2004 at 69%, according to The Federal Reserve Bank of San Francisco.

Following the Depression, national prosperity pushed homeownership rates steadily higher. Says The Post:

Since 1940, the number of Americans owning homes had steadily increased in each decennial census due to a mostly booming economy, favorable tax laws and easier financing. The one exception had been 1980-1990, when ownership remained unchanged at 64.2%.

"Analysts say the U.S. may never return to its mid-decade housing boom peak," it continues.  "The reason: a longer-term economic reality of tighter credit, prolonged job losses and reduced government involvement."

Minority losses particularly severe

The AP says that the decade's loss hit African Americans particularly hard. Now, the gap between whites and blacks in homeownership is wider than at any time since 1960. Forty years of progress in housing equality were wiped out, says the article, which also breaks down rates among states and by age groups.

The story continues:

Among all minorities, homeownership in the U.S. rose slightly over the past decade to 48% from 47.4%, boosted by more home buying among the younger and larger Hispanic population. Hispanic homeownership increased from 45.7% to 47.3%.

In all, nearly 44% of all renters in the U.S. are minorities, compared with only 22% of homeowners. Broken down by state, minorities make up more than half of all renters in 10 states and the District of Columbia, up from 6 in 2000 -- with the new states being New York, New Jersey, Mississippi, Louisiana and New Mexico.

Troubled mortgages show fitful gains and losses

So-called "mortgage delinquency rates" had improved for a time but now more homeowners are falling behind on their mortgage payments.

The Washington Post reports that, for the quarter ended in June, 12% of homeowners with a mortgage were in foreclosure or had missed one or more payments. That's up from 11.4% in the first quarter of the year.

Partly, the problem in June was seasonal, said the Office of the Comptroller of the Currency, which regulates banks and keeps the statistics.

But the "sluggish economy and elevated unemployment" also were blamed. Despite the drop, delinquency rates still are lower than at this time last year.

The numbers new foreclosures are holding steady at 4% of mortgages, the report says. Completed foreclosures dropped off by a third but that is probably due to procedural problems and is expected to pick up.

"Today there are at least 4.2 million homeowners … (who) are late on their mortgage payments or somewhere in the delinquency and foreclosure process," says this article by McClatchy Newspapers.

Efforts by government and private industry to modify home loans to make them affordable have been largely disappointing, especially against the Administration's goal of modifying 4 million mortgages.

Writes McClatchy:

"I would say they (modifications) are somewhat better than they were three years ago, but still woefully inadequate to meet the demand, given the still remarkably high levels of distressed borrowers they are attempting to deal with," said Paul Leonard, director of the California office of the Center for Responsible Lending, a Durham, N.C.-based advocacy group.

From December 2009 through June, more than 1.6 million government-backed mortgage modifications had been started, but only 791,000 became permanent. 

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