U.S. Homeownership Falls to 65.4%, Lowest Since 1997

The U.S. homeownership rate fell to 65.4 percent in the first quarter of 2012 to the lowest level since 1997, as a weak economy and an accompanying foreclosure crisis has forced more Americans to shift into renting.
The rate fell from 66 percent in the fourth quarter and dropped a full percentage point from one year ago, the Census Bureau said today.
The first-quarter 2012 homeownership rate of 65.4 percent is the same level as in early 1997 – and down from the pre-crisis peak of 69.2 percent in mid-2004.
The vacancy rate for rental homes was 8.8 percent in the first quarter, compared with 9.7 percent a year earlier, the Census Bureau said.
Foreclosures – numbering as many as 4 million since 2007, and counting – have contributed significantly to a widespread wave toward renting.
Additionally, falling home values have yet to find a bottom in hardest hit communities and have created a new class of “underwater” borrowers who owe more than the value of their homes.
Many of these borrowers in “negative equity” are facing foreclosure, or have added to a mindset that a home purchase is no longer the type of investment that will pay off for years to come.
Zillow, the real estate data site, predicts home values will remain nearly flat during the next 12 months, reaching a bottom nationally in late 2012 and falling only 0.4 percent from the first quarter of 2012 to the first quarter of 2013.
Despite record low mortgage rates, home sales are relatively stagnant with tight inventories in some communities and strict lending standards for many borrowers.
Existing-home sales were down in March as total housing inventory at the end of March declined 1.3 percent to 2.37 million existing homes available for sale, according to the National Association of Realtors. Listed inventory is 21.8 percent below a year ago.

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