Rise and Fall of Homeownership

Housing Crisis Propelled by the nation’s worst epidemic of foreclosures on the heels of the most liberal mortgage underwriting in history, the percentage of home ownership has fallen to a new 20 year low.

The rate of homeownership soared to its highest level of 69.1% during the real estate boom in 2005 only to see the worst housing crisis in national history. As a consequence, homeownership has fallen to 67.2%, according to the U.S. Census Bureau. Nearly a third or 32.2% now rent.

The figures represent a starting decline in homeownership after the highest levels of appreciation in U.S. real estate history. The slow down in real estate sales coupled with record levels of deflation in most markets have led to lower home values in the over-whelming majority of the country. It’s harder to get a mortgage these days for many want-a-be home buyers, restricted to tougher lending standards and rising home mortgage rates.

An estimated 2.4-million foreclosures have already occurred nationally and the percentage of homeownership is only expected to drop further as more than 3.2-million more properties are forecast by Housing Predictor to be foreclosed through the end of 2011.

The administration of President George W. Bush boosted the real estate market, providing incentives for lenders to make more mortgages to borrowers with poor creditworthiness. But as President Bush enters the last stages of his presidency, the nation’s real estate crisis is taking on a new sort of fallout.

The political pressures mounted on the White House by special interest group lobbyists, including those from real estate and mortgage trade groups has now clearly back-fired, according to industry analysts.

More and more investors and primary home owners are walking away from properties because the mortgages have gotten too expensive to afford or the values of properties they purchased have deflated so much that they don’t feel they’ll ever see a profit from holding onto the property. More than 3-million properties are now in default nationally, according to the Mortgage Bankers Association and the next wave of adjustable rate mortgages are just beginning to reset.

Hundreds of thousands of new renters are coming from foreclosures they have suffered in the foreclosure epidemic, and many are having difficulty even renting an apartment because of their damaged credit. The pool of renters is increasing after a record high number of residential units were constructed during the boom. Landlords in especially harder hit communities are beginning to understand the plight of those who have undergone foreclosure. Rental requirements are changing even as unemployment climbs.

As the national real estate crisis enters its next step, the crisis is broadening into all income levels from minority and lower-income homeowners, who have been the hardest hit. Some 2.9-million minority families took out mortgages in the past six years.

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