Magazine article American Banker

Homeownership Seen on Road to Recovery

Magazine article American Banker

Homeownership Seen on Road to Recovery

Article excerpt

Did you have a barbecue in your backyard on the Fourth?

Chances are you did. Almost two-thirds of U.S. households own their own homes, and most have yards, private or shared.

After decades of steady growth, the incidence of homeownership topped out at just under 66% in 1980 and has been flat or down slightly since then. This trend, while numerically small, has been alarming to economists and to lenders. The major reason has been a sharp contraction in the number of younger people buying into the American dream.

Various explanations have been offered. One is changing lifestyles -- you don't barbecue quiche. Another is affordability, with prices high and incomes growing slowly. And this has understandably worried economists and lenders.

The latest report by the Joint Center for Housing Studies of Harvard University points out that by the beginning of this decade, "the nation had a homeownership deficit consisting of the two million people who would have owned homes if homeownership rates had held at 1980 levels." That comes out to perhaps $400 billion in mortgage needs, or what would have been a good year's originations before the recent refinancing boom.

Making a Comeback

But now comes word that this may all be changing. "Improved affordability has halted the decade-long slide in the national homeownership rate. Although yet to regain the ground lost during the 1980's, homeownership rates for young households are on the rise," the Harvard study says. …

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