Home Ownership Falls to 67% or 62% (Depending on Who You Ask)
The ongoing deleveraging of the American Consumer continues apace. The most recent evidence of this is the 2.0% decrease in homeownership rates. My expectations as we work through the next 5 million foreclosures is that rate will revert towards historical means, before settling in near the 65% area. (John Burns forecasts 62%).
However, the NY Fed produced a report, however, that suggests a very different number. Back out “Home-Owers,” (Neg Equity Households) they say, and you already are at a 62% ownership rate:
“Recent years have seen a sharp rise in the number of negative equity homeowners — those who owe more on their mortgages than their houses are worth. These homeowners are included in the official homeownership rate computed by the Census Bureau, but the savings they must amass to retain their home or purchase a new home are daunting. Recognizing that these homeowners are likely to convert to renters over time, the authors of this analysis calculate an “effective” rate of homeownership that excludes negative equity households. They argue that the effective rate — 5.6% points below the official rate — may be a useful guide to the future path of the official rate.”
Expect to see more discussions on this interesting data point . . .
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US Homeownership Rate (1965-2010)
\chart via Calculated Risk
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Sources:
The Homeownership Gap
Authors: Andrew Haughwout, Richard Peach, and Joseph Tracy
May 2010 Volume 16, Number 5
JEL classification: G21, R31, R51
http://www.newyorkfed.org/research/current_issues/ci16-5.html
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July 23rd, 2010 at 1:37 pm
So wait…More Americans owned homes under liberal presidents–LBJ, Nixon (who governed as a liberal and did more to expand health and safety regulations than many Democrats), Ford, Carter, and Clinton? And home ownership actually declined quite sharply under conservative presidents–Reagan and Bush? And the only way that the one president who truly embodied the conservative ideology–George W. Bush–was able to drive home ownership up was with a massive system of legalized mortgage fraud creating the worst economic collapse since the Great Depression?
Hmm…
July 23rd, 2010 at 1:37 pm
looks like we are about halfway to a sustainable housing market, perhaps another 5 years of declining home ownership and we’ll get there.
July 23rd, 2010 at 1:39 pm
franklin411:
Nixon didn’t govern as a liberal. It’s only when you compare him to today’s Republicans could he be considered anything of the sort.
July 23rd, 2010 at 1:40 pm
constantnormal:
Doesn’t bode well for the next few years, does it?
July 23rd, 2010 at 1:42 pm
@Calvin nosirree.
July 23rd, 2010 at 1:44 pm
@Calvin:
Nixon was actually quite liberal. Maybe not a liberal at heart, but he knew that the way to build the GOP was to pick off the poor white voters that used to be Democrats until the Democrats gave minorities civil rights. Look at this list of Nixon’s liberal accomplishments:
Ended the draft
Increased welfare/Social Security spending
Imposed wage and price controls
Ended the gold standard
Created/signed the laws creating the EPA and OSHA, and the Clean Air/Water Acts
Proposed comprehensive Health Reform that would have covered a greater percentage of Americans than the Obama plan
Quietly expanded LBJ’s desegregation and affirmative action measures
Supported the ERA
July 23rd, 2010 at 1:51 pm
Although, if you back out negative equity households, as BR suggests, then we are already at a historically sustainable level, so perhaps all that has to happen is for the folks who are underwater to be washed out, and things can return to a state of “normalcy”, albeit with dramatically reduced housing prices.
Again, about 5 years seems like a reasonable interval for this to take place.
July 23rd, 2010 at 2:00 pm
franklin411 — I’m only gonna say this once, so if it does not ring a chord, then just let it slide … the world does not revolve about political ideologies. It’s OK to have a political ideology, just don’t fall into the trap of thinking that this is the way that the world works. Ideologies can be useful to define a set of behavioral practices, but they say nothing about how the world operates.
I have friends who are the exact opposite of you, your political anti-matter, if you will. I’ve had to put in place mail-handling rules to delete without reading all of some of their emails, and I never, ever engage them in conversation about anything that could remotely be interpreted in a political manner, and still I get surprised by them manufacturing some ridiculous interpretation of some innocent remark and going ballistic on me.
Sometimes a cigar is just a cigar. Not everything has to be about political ideologies.
July 23rd, 2010 at 2:04 pm
Just think what would have happened had the Gubmint not provided the equivalent of another TARP, i.e. $700B in support of the housing market in the past year as Barofsky just reported?
http://www.reuters.com/article/idUSN2116858520100721
Where are all those deficit hawks on that issue when a $33B unemployment extension draws a filibuster? I suppose the unemployed don’t give enough campaign donations.
July 23rd, 2010 at 2:10 pm
What you said, constantnormal.
And if “liberal” Nixon is a bellweather for good liberal governance, well, I wouldn’t be too proud of what had to be nearly the stupidest (there’s quite a competition mind you) liberal economic idea ever–wage and price controls. That’s like trying to walk a dog by holding its tail. So if you want Nixon on your liberal team, you can have him.
Incidentally, if the demarkation line between a liberal point of view and a conservative one is the relative belief one places in the efficacy of government to solve life’s problems, George W Bush should be on your team too. He and LBJ had more in common than (nominally) hailing from Texas. Neither ever saw a government program they couldn’t love.
July 23rd, 2010 at 3:04 pm
I’m becoming more convinced that a higher level of government spending was necessary during this recession, and might be necessary going forward. All the pieces are in place for this to happen, even if it is as simple as ZIRP. To me, that is stimulus enough. However, the fact that we bailed out businesses that made bad bets and lost is akin to pouring acid into a freshwater stream. It changes the ecology of the system, and changes the nature of how it performs. Because of this new step in our nation’s economic policy, they will have to remain involved for a longer time.
There are too many businesses and individuals (of which I am one) who nearly failed or went under, that are being kept afloat by Uncle Sam. You cannot pull the rug out from under these programs now. It might be prolonging the inevitable, but that is what must be done now.
If you had asked me in the days before TARP was passed into law, I would have had a very different attitude about it. The way Bear was handled, the way Lehman was handled, should have been how Citi, Merrill, B of A, Wachovia, Goldman, and others should have been handled.
We’d be two years on now, and some healing would likely be underway, albeit through very weak numbers, which we have now anyway.
July 23rd, 2010 at 3:49 pm
Can we at least agree that Tricky Dick was one of the five worst presidents ever?
July 23rd, 2010 at 4:12 pm
@ACS, yes, domestically. No so, internationally. Nixon brought Vietnam to the bargaining table through B-52′s over Hanoi, finally finding a somewhat graceful exit to that nightmare, and began prying open China through his visit there. Incidentally, in my view, international relations is far and away the most important part of any president’s job.
July 23rd, 2010 at 4:26 pm
The Americans who lost jobs to the factories/labor camps of Guangdong may not agree about prying open China.
July 23rd, 2010 at 4:29 pm
@TC
Sorry, but Bush is entirely yours. You are exactly right that the difference between liberals and conservatives is that liberals believe that the government must step in to ensure that nobody subverts the free market by cheating on the game. We believe in fair competition in a free market, and we trust the people to police that market through government so that the best outcome (truly free competition) results.
Conservatives believe that government can’t possibly police the market efficiently. Only the market is capable of policing the market (circular logic much?). Sound familiar? It should…that’s the Bush Doctrine. They practically had that engraved on the regulators’ foreheads at the Treasury Department, SEC, FDIC, Comptroller’s office, etc… from 2000-2008.
And conservatives have always been hypocrites on their anti-big government stance. Just look at abortion.
So Bush…he’s your baby! =)
July 23rd, 2010 at 6:02 pm
@BR
67% 62%… How about we just call it a 61.8% and go home for the evening…
@franklin411
Dude – you’re going to be a trip as a grandpappy (assuming you’re not gay)… I can just see it now (in a high pitched crackly voice)…
“Well grandson, it all goes back to the days of that damn George Bush…”
July 23rd, 2010 at 6:06 pm
Nixon was a commie, not a liberal. (Commies aren’t liberal, and GW Bush was not conservative.)
Wage and price controls (command economy).
Increased policing of private matters (e.g. started the war on drugs)
Persecution of political enemies (IRS audits)
He took the first steps making commies our friends – detente with USSR and opening China.
He ended our hot war against the commies in Indochina.
I would agree with Curmudgeon that these foreign policies were good things.
Politics is much more than one dimensional. Nobody can be described by a point on a line.
July 23rd, 2010 at 6:59 pm
How did this topic devolve into liberals vs. conservatives? Oh right, same song, different dance.
So to add to the discordant music.
Liberals: More government control of free markets, less government interference in social matters.
Conservatives: Less government control of free markets, more government interference in social matters.
July 23rd, 2010 at 7:17 pm
I must have this all wrong. To me, GW Bush was not a conservative but a con-artist, along with all the rest of the neocons.
The federal government has no business helping people buy homes they can’t afford. The liberals started it I guess thinking they were doing something good, but it was Bush who actualizing nationalized the GSE’s. No one really *owns* their home unless they hold the title and they don’t hold the title while they’re paying a mortgage. With nationalized GSE’s, the federal government owns half the real estate in America. Now we borrow from the government and work to pay them back–it’s the “company store” all over a gain. Sounds like socialism to me. The biggest lender in America is a state-owned enterprise, like they have in China.
~~~
BR: I will give the GOP this much: They certainly instilled some discipline — Rove had his bitches following orders. The dittohead rank & file Republican were unquestioning synchophants, who did what they were told.
July 23rd, 2010 at 7:36 pm
i saw an interesting bumper sticker that had G. W. Bush & Obama on it, and in between them the words
NOTHING CHANGED
which is my comment to all this phony-baloney political drivel. The two party system is a complete fraud (and now a complete farce too) as neither party gives a shit about the common citizen, and sing from the same song book. As long as either one of them is “in power” (and we’ve yet to vote them out) nothing of any substance is going to change for the better for the general public, and the environment: “you can fugetabotit.”
July 23rd, 2010 at 8:10 pm
Sorry folks but progressives/leftists believe Mankind is perfectable if only they (government) would be able to make the changes needed. Everyone can be equal. That path leads ultimately to coercion at best and the Gulag at worst. True conservatives believe Mankind is flawed and different. The role of government is to temper the excesses while accepting that people will have different outcomes in life. The term liberal has varied over time so much that it should be avoided. Classical Liberal or contemporary? Most of the people who use the label conservative today haven’t a clue what it really means and are me-too-but-less leftists. The best example is the regime of G. W. Bush. Only a progressive would be stupid enough to believe in spreading Democracy to people who have not asked for it nor have the cultural and institutional prerequisites to make it feasible. The last true conservative president we had was Silent Cal.
July 23rd, 2010 at 10:09 pm
This is a travesty. Every American should be able to own a home; and, the government should be there to help enable this idea. What we need to do is create a state sponsored company that gives low yielding mortgages to people at below market rates….we should also then make the interest on the mortgage tax deductible…really create an “advantage” for home ownership over renting. If we did these things, I bet we could really boost home ownership in the country–everyone could achieve the American dream.
It could be awesome.
July 24th, 2010 at 8:37 am
I can’t see the point of excluding negative equity homeowners – except as a meaningless exercise. Practically everyone with a car loan is in a negative equity position with respect to that car and we don’t try to ignore those vehicles.
On the liberal/conservative thing… I’ve perceived conservatives as believing that it’s “every man for themselves” (with a gun.) Liberals believe something else – whatever that is.
If you define conservative in these terms then everything makes sense: tax cuts for the wealthy, bloated government programs benefitting powerful congressmen or interests, inside deals, farm subsidies, proliferating lobbyists, the decline of the middle class, off-shoring of manufacturing, HFT, nihilistic Republicans, bloated compensation, Goldman-like behavior, short term quarter-to-quarter thinking, etc. etc. are entirely consistent. Individuals and groups of individuals with a common interest are simply acting to take care of themselves. This jumble of special interests are always there but they get more frantic and more organized when chaos or a possible change to the status quo exists, opportunities are floating around for the taking and a degree of uncertainty or panic is added to “every man for themselves” – all to be found in abundance during the past 36 months.
Off subject but I find it hard to reconcile the conservative camp wrapping itself in Christianity. I don’t believe Christ preached “every man for themselves.” Quite the opposite.