TTurk

Low Home Ownership Rate Hurting the Economy

The author's analysis outlines numerous issues concerning why housing will not contribute to an economic recovery from the current recession. Unfortunately, the author is correct and the problem is worse than simply an oversupply of homes and rental units.

Homes can no longer be purchased with zero, 5% or 10% downpayments. Over 40% of homes purchased in the past 5 years have been unconventional. Why? Because families had no savings to use to purchase a home. Now, that 27% of household wealth has been destroyed in the current recession, even fewer families can afford homes. Those who can buy up, are unable to sell their homes for the needed equity.

The result of all of this is that the lack of demand will result in home prices declining further and probably farther than currently forecasted.