Report: Homeownership on Path to Sustainability

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This is a case when a relative slow growth is better than a rapid increase.  Please read the article below.

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As most housing metrics turned around last year, one vital statistic stayed down: the homeownership rate. However, one analyst at Fannie Mae says that low homeownership—when put in context with other data—might indicate a promising trend in sustainability.

According to recently published data from the Census Bureau’s American Community Survey (ACS), the homeownership rate was down in 2012 for the fifth consecutive year, falling to 63.9 percent—the lowest rate recorded since the survey was fully implemented in 2005 and lower than any rate recorded in any decennial census since 1970.

“By most measures, 2012 was a year of housing market recovery, with gains in housing construction, home sales, home prices, and mortgage originations. However … the homeownership rate did not follow suit,” said Patrick Simmons, director of strategic planning for Fannie Mae’s Economic and Strategic Research Group.

At the same time, the ACS recorded significant improvements in housing affordability for all groups, including renters. According to the survey’s results, the proportion of households spending at least 30 percent of gross income for housing (the threshold before the situation is considered a “housing cost burden”) declined nearly 2 percentage points, bringing it to pre-recession levels.

“The improvement for renters is particularly notable, as it broke a string of four consecutive years of declining affordability,” Simmons said. “Also of note was a huge improvement in affordability among young homeowners, as evidenced by a drop of 10 percentage points in the rate of affordability problems among 25-to-34-year-old owners during the last five years.”

According to the 2012 ACS, the 25-to-34-year-old bracket was also the group to see the biggest decline in homeownership, with its rate falling 1.9 percentage points. Since 2007, the homeownership rate for that group has dropped 8.5 percentage points.

To read the complete article please use the link below.

Path to Sustainability

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