Forecast panelist Joel Singer discusses the rocky trajectory of home ownership.
On September 28, 2015, the UCLA Anderson Forecast quarterly economic outlook presents Housing Is Back, which examines the state of the California housing market. John Williams, president of the San Francisco Federal Reserve Bank, will offer his perspective on interest rate policy, and two panels of experts will address questions of affordability, mortgage finance and gentrification.
Register for the Forecast conference.
By Joel Singer
The national home ownership rate has followed a bumpy rollercoaster with a series of up-and-down movements in the past 20 years, with the end of 2014 marking a period of notable decline. This downward trend has fueled speculation about the future of home ownership in the United States following risks exposed during the recession and foreclosure crisis, as the U.S. home ownership rate fell to the lowest level in more than two decades in the fourth quarter of 2014.
Historically, the national home ownership rate rose steadily through the late 1960s and 1970s, from 63 to 65.6 percent, before declining slightly in the early 1980s. To address a decade of stagnation, national leaders pushed efforts to expand home ownership in the mid-1990s, which led the rate to rise rapidly from 1994 to 2004, from 64 percent to a record high of 69 percent. However, the recent national home ownership rate has declined almost fully to its 1994 level.
While the decline has provoked worry about home ownership access, many experts believe the fall in the home ownership rate actually is at the tail end of its decline and that advantageous conditions are percolating. For example, mortgage delinquency and foreclosure rates have greatly decreased, wage growth is expected to follow a period of strong job growth, and there are signs that mortgage credit conditions are improving.
According to analysis by the Harvard Joint Center for Housing Studies, the home ownership rate for young adults ages 25 to 34, which rose from 45 percent in the mid-1990s to a high of 50 percent in 2004, fell to 40 percent as of 2014, representing the largest percentage decline in home ownership of any age group over the last 10 years.
To counter the socio-demographic changes that are deleterious to the housing market, greater effort will have to be made toward encouraging favorable measures. For instance, more accessible mortgage terms, affordable housing costs and income growth are steps that may gain greater momentum in shaping future outcomes than socio-demographic characteristics — especially when it comes to the long-term prospects of the home ownership rate.
Joel Singer is chief executive officer of the California Association of Realtors®. Singer has held the Association’s top staff position since November 1989, after serving as C.A.R.’s chief economist and heading the Association’s public affairs department. Singer was instrumental in developing Real Estate Business Services Inc., C.A.R.’s for-profit subsidiary, and serves as its president. He also is president and chief executive officer of zipLogixTM. Singer joined C.A.R. in 1978.
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