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America becoming a ‘Rentership Society’

August 8, 2011 by in Apartments, Rental Market Info
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Since the housing bubble burst in 2008, millions of homes have gone through foreclosure. But what happens to all the families caught up in the financial chaos? Apparently, millions of them have become renters. The trend towards renting has been so strong in the past few years that analysts from Morgan Stanley recently reported that the United states is quickly becoming a nation of renters.

Graph of US Home Ownership Rates 1965 to 2010

Graph of US Home Ownership Rates 1965 to 2010

In the August 5th CNN Money article, “Home ownership hits lowest level since 1965” Les Christie describes how the US home ownership rate has dropped from 69.2% in 2004 to only 59.2%. While the official numbers show the home ownership rate at 65.9%, the number drops to 59.2% when you factor in delinquent mortgage borrowers (the ones who are likely to lose their homes at some point).

Since Rochester has been fortunate to evade the worst of the housing crisis, and in the process rack up a number of top 10 placements for real estate investing and home ownership, our home ownership rates are quite a bit more steady. The rest of the nation’s real estate has not been so lucky. In fact, the average home price has declined 32% nationally. Despite the ridiculously low interest rates on mortgages, the market just can’t seem to generate buyers fast enough. The two biggest factors being the much more stringent lending practices and the overall decrease in employed people, ready to make a home purchase.

This bubble, and the consequent burst, were surprises to no one with a fundamental knowledge of economics (regardless of what the talking heads on the news have been saying for the past few years). Having been in a position where I could see this disaster coming, I have to confess that I don’t see anyone making the decisions at a national level that are necessary for us to turn this crisis around.

Perhaps the analysts at Morgan Stanley are right, America will be a much more mobile, renter-centric, society for the foreseeable future.

Comment »

  • Kelly says:

    We are incredibly lucky here in Rochester…. sad to say that it’s because our bubble burst before the rest of the nation with the exodus of industry here. Never thought the twilight of Kodak and the like would actually pan out for the better. Now our organic renaissance here is that much more appealing, compared to the Detroits of America. Nonetheless, it’s embarrassing to think that if you described the conditions leading up to the national burst to a 10 year old with median logic skills they would probably be able to predict the current situation. Yet we allowed poor practices to fester for over 30 years and the arbitrary decision that America needed more homeowners would give way to our current administration mulling over how to rent the thousands of foreclosures now in their possession. Oye.

    August 10, 2011 @ 7:59 pm

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