For some hard working homeowners living in Silicon Valley it is difficult to get an actual sense of the rest of the country's economy unless they turn on the news or pick up a paper. Some parts of the Bay Area seem to be micro-economic super powers where townhouses cost a million dollars and average sized single family homes start at two million. In addition, these last two years have seen a rise in home purchases with low days on market averages, which means that if you want to sell a home, several potential buyers will send you an offer fairly soon.
So what about national home-ownership? As of the third quarter of 2014, it was 63.9 percent which is the lowest third quarter since 1994. Since the most recent housing bubble crash (2005-2007), ownership rates did rise, but they have also fallen, following a roller-coaster pattern since.
Historically, home-ownership rates rose steadily back in the 60's and 70's, from 63 to 65.6 percent, and then declined in the 80's. After the government pushed home-ownership in the 90's, rates rose from 64 percent in 1994 to 69 percent in 2004.
How should we interpret these numbers? Is American's dream of owning a home on the decline? Well, perhaps, but it doesn't mean that the housing market is heading down a dark road. Some economists believe that current ownership rates may indicate that rates will rise in the years to come. Some point out that the low rate may be driven by some positive factors, such as having more households in total, which indicates a positive market force. Also the decrease in ownership may be due to a rise in renters, many of which have not lost a home, but who are starting out and will be buying their first home in the future. Overall, predicting the economy is very tricky, but there are chances that national home-ownership rates will begin to steadily rise in the future.
This blog's information has been brought to you by my experience, and C.A.R.'s June/July 2015 "Bust to Boom?"
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