When the Census Bureau announced on Tuesday that the rate of home ownership in the United States continued its nearly nine-year decline, pundits were quick to lay the blame on higher lending requirements, bankers reluctant to make loans, increasing interest rates, and a weak economy with slow job growth. In addition, young people are living at home longer, owing to student-loan debt and poor job prospects. As a result, according to the Census Bureau, rental rates are climbing as families needing a place to live have few other options.
Having fallen from its peak of 69 percent, reached in 2004, current home ownership has dropped to 65 percent, back to where it was in 1995. Robert Schiller, economics professor at Yale, thinks the rate will continue to fall further.
Home prices are increasing not because of demand by new buyers but because of investors who see the opportunities in buying distressed properties and turning them into rentals. In some places in the country, one out of every two home purchases is paid for in cash.
But something else is afoot: Fewer citizens are buying into the notion that home ownership makes economic sense and is equivalent to a savings plan that can be turned into income in later years. As Emily Badger noted at The Atlantic Cities, “We have traditionally considered home ownership to be a sign of the health of the economy. But some of these people who would have been homeowners 10 years ago … have concluded that they would rather rent [today].”
Some have no doubt been so badly mauled financially in the recession that they have few options. Others have long memories and remember the pain and suffering they endured as a result of deliberate government policies instituted to make home ownership possible to millions of unqualified buyers.
One of those with long memories is Henry Cisneros, a key player in developing the “National Homeownership Strategy” while he was secretary of housing and urban development under Bill Clinton. Unanimously confirmed by the Senate, Cisneros took over at HUD in January 1993, and by 1997, had boosted the U.S. home ownership rate from 63.7 percent to 65.7 percent. Even after leaving office, his strategies continued blowing up the real estate bubble so that by the time Clinton left office in 2001, home ownership was at 67.5 percent, on its way to peaking during the summer and fall of 2004.
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