According to the US Census, home ownership rates in America have hovered between 64-65% (+/- .5%) for the past forty years, at least until the recent bubble. During the bubble, home ownership climbed to a high of 69% in 2005. As we now know, the home ownership rate is declining and it is anyone’s guess as to where it will bottom. However, if we assume that the home ownership rate will decline to the same level as the last real estate decline in the early 1990's, that would return the home ownership rate to 64%. That means that 7.5% of the people who owned homes at the peak in 2005, would move from the home ownership camp, to the non-home ownership camp.
Frankly, I find this scenario very scary. I have always believed that the meltdown would impact about a million homes, but 7.5% of the homes in America, is a much more serious number. Although I want real estate prices to decline so we have more affordable choices, I’m not sure I want to see 7.5% of the population lose or give up their homes.
Paul
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5 comments:
"I’m not sure I want to see 7.5% of the population lose or give up their homes."
God only knows how many of those homes were purchased for appreciation purposes only.
Those people who bought multiple homes can easily 'give up' a few of them.
The numbers may be scary, but the correction is necessary.
I’m not sure I want to see 7.5% of the population lose or give up their homes.
Either they "lose their homes" or we allow the government to take money from us and future generations to keep them in their homes, whether it defies common sense or not.
You *have to* get beyond the stigma of someone losing their home as being a bad thing. If someone has negative equity, what are they losing? Debt? Losing debt is a bad thing? They don't own the home, the bank owns it.
One more post:
This whole issue of people losing their homes and all of the proposed solutions completely defy logic and common sense. Here is why:
You have two groups of people, groups A and B. Everybody in group A bought a home. Some of them lied on their loan applications to buy homes they couldn't afford, some were speculating hoping to get rich quick, some took out equity to buy toys, and some just bit off more than they could chew. All of the people in group A are now in trouble and want a bailout.
Now take group B. Everyone in group B is a taxpayer. Most of the people in group B had nothing to do with the housing mess. Many of the people in group B are not even born yet. Yet, all of the people in group B could potentially have money taken from them and given to people in group A.
So, who is worthy of carrying the burden in this mess? Those who are not even born or who were uninvolved, or those who were involved?
I agree, no bailouts. I agree a correction is necessary. And there is not stigma for me ... I didn't bite in the boom. My concern isn't so much for the folks who have lost their homes, as it is for the overall economy and likely bank failures (paid for with my taxpayer dollars) and additional taxpayer paid Wall Street bailouts, that are likely (IMO) to come if the real estate market is flooded with that many REOs. If we actually see that many REO's, we are only in inning 3 of the bank bailouts. And like it or not, the banks will be bailed out.
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