CEPR - Center for Economic and Policy Research

Multimedia

En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press Doesn't Anyone Care About Homeownership Anymore?

Doesn't Anyone Care About Homeownership Anymore?

Print
Friday, 29 April 2011 07:40

It seems not given the almost complete lack of coverage of the release of data from the Census Bureau showing that the homeownership rate had fallen to its lowest level since the 4th quarter of 1998. I date the bubble as beginning in 1996. It remains to be seen whether all the growth in homeownership associated with the bubble will be reversed. 

On a more positive note, the release did show a substantial decline in vacancy rates, although they are still at historically high levels. With most of the air now gone from the housing bubble, we may finally be getting back to a more normal market.

Comments (5)Add Comment
...
written by skeptonomist, April 29, 2011 8:39
Dean's dating of the bubble as beginning in 1996 shows the difficulties and dangers of stimulus through financial manipulation. Housing prices were actually fairly low in the late 90's and mortgage rates were lower than they had been for over 30 years, so it is not surprising that the Fed and others thought that stimulating housing would be a good way out of the recession of 2001 (Krugman literally called for a housing bubble in 2002). But as recognized by Dean and some others, prices had already kicked up by then and the favorable conditions quickly turned into an unsustainable bubble. Trick mortgages, MBS's and CDS's were integral parts of the bubble - it is very hard to see the bubble reaching the heights it did without these things. Influential people were making big money, and the likes of Alan Greenspan do not lightly take away the punch bowl from such people.
The New Normal?
written by paul, April 29, 2011 8:58
"With most of the air now gone from the housing bubble, we may finally be getting back to a more normal market."

If this is the new normal for the housing market, we are in for a very extended period of high unemployment. What would JMK do?
Why worry about home ownership?
written by Ralph Musgrave, April 29, 2011 11:16
.
Why SHOULD anyone care about homeownership rates? Having a roof over one’s head is all that really matters. Whether people rent or buy is irrelevant: I see no excuse for subsidising home ownership. Germany is about the wealthiest country in Europe and has the lowest level of home ownership. Many Germans, it seems, prefer renting to buying. What’s wrong with that?
homeless renters?
written by frankenduf, April 29, 2011 12:34
i agree with Ralph Musgrave- i remember during the bursting, as tearful citizens were being foreclosed on due to the fact they could not afford to own their house- the implication seemed to be that they would be 'out on the street' and that this should stir our hearts to compassion- but i was always like: yawn- ok so u have to rent- and?...- full disclosure: i rent
Dean You Couldn't be More Wrong
written by dp, April 29, 2011 2:51
Family formation has fallen from ~1.5MM a year to ~300,000 and that has persisted for several years. Those become your first time home buyers.

There are millions of homes held out of inventory b/c the banks don't want the hit, dribble/dabble the bad news out in the marketplace.... There are millions of homes not on the market b/c there are no buyers.

We are 5-10 years from a stable housing market and when it stabilizes those folks in 3,000sq.ft. homes will realize there is virtually no market for their dwelling.

Reason: W/O funny money loans folks can't buy more than 3X earnings. Median family income in my area is $50,000 so the median home price will be $150,000.

40 years ago my parents finally built for the first and only time in their lives. It was an all brick 3 BR, 1 1/2 BA home with a carport on a corner lot. It was ~1,300 sqft.

We are returning to that era IMHO.

Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.

busy
 

CEPR.net
Support this blog, donate
Combined Federal Campaign #79613

About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

Archives