In 2004, homeownership rates rose to an all-time national high -- 69.2%. By the time the first quarter of 2011 rolled around, the rate had dropped to 66.4%. Now, a new study released today by the Mortgage Bankers Association Research Institute for Housing America (RIHA) says this drop reflects a decline from unsustainable levels to something closer to historical averages. The paper, titled Homeownership Boom and Bust 2000 to 2009: Where Will the Homeownership Rate Go from Here?," was co-authored by Stuart Gabriel, UCLA Anderson's Arden Realty Chair, Professor of Finance and Director, Ziman Center for Real Estate and Syracuse University's Stuart Rosenthal.
The study found that the increase in homeownership rates was most pronounced in the under-30 demographic and that the increases were concamitant with relaxed credit conditions that allowed more households to avail themselves of mortgage credit. Following the economic crash, trends have reversed and homeownership rates have returned to 2000 levels.
In a press release that accompanied the release of the report, Gabriel is quoted:
“The question of why homeownership rates are falling now is really a question of why they were so high during the middle of the last decade. said Gabriel. From the late 1960s to the mid-1990s, U.S. homeownership rates were relatively stable between 64 and 65 percent. Our findings suggest that the boom and bust in homeownership rates over the last decade was driven in part by an initial relaxation of credit standards followed by a tightening of credit with the onset of the 2007 financial crash. Evidence also suggests that households headed by people in their 20s and 30s were willing to take more risk with respect to homeownership in the boom years, followed by a return to a more conservative approach after the crash.”
Among the key findings in the report are:
- A combination of changes in mortgage credit standards and attitudes towards investment in homeownership likely contributed to much of the boom and bust in homeownership over the decade
- • Changes in the population’s socio-demographic composition and economic attributes also served to lower homeownership rates between 2000 and 2009
- Individuals appear to have been more risk-seeking in their approach to home buying in the first half of the last decade. This changed to a more risk-averse posture following the real estate meltdown, and
- Between 2000 and 2009 there was a one percentage point increase in the homeownership rate. But, were it not for the shifts in access to homeownership through easier credit and the changes in socioeconomic conditions, the homeownership rate would have actually fallen between 2000 and 2005, rather than increasing.
To view the entire report, please click here
To visit the Ziman Center for Real Esate Website, please click here
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