U.S. Home Ownership Rates Continue to Fall

Feb. 02, 2010 3:08 PM ETEQR, AIV, DHI, LEN6 Comments

By Dirk van Dijk

A smaller percentage of Americans owned their own homes in the 4th quarter of 2009 than at any time since 2000. In the 4th quarter 67.2% of Americans owned their own home, down from 67.6% in the third quarter and two full percentage points below the peak set in the fourth quarter of 2004.

As the first graph below shows (from Calculated Risk), the homeownership rate rose steadily throughout the late 1960s and 1970s, rising from under 63% in 1965 to just short of 66% by 1980. The super high interest rates needed to slay the inflation dragon took their toll, however, and by the end of 1986, the rate had fallen all the way back to 63.5%.

We then spent a decade with the homeownership rate hovering around 64%. In the late 1990’s the rate soared, eventually peaking at 69.2%. Since then the rate has been falling at about the same rate it did in the early 1980s, with the bulk of the decline happening since the third quarter of 2006. Homeownership has always been part of the “American Dream,” and now that dream is slipping away for many Americans.

Home Ownership by Region

Regionally, the highest homeownership rates are in the Midwest (71.3%) and in the South (69.1%) where housing is generally relatively cheap, and lowest in the West (62.3%) and the Northeast (63.9%) where housing tends to be expensive.

Relative to a year ago, the biggest declines were in the South (down 0.7 points from 69.8%) and in the West (down 0.4 points from 62.7%). Those two regions have the poster children for the foreclosure crisis: Florida, California, Arizona and Nevada. From the fourth quarter of 2004 peak, however, the largest drop has been in the Midwest (off 2.4 points from 73.7%) but all regions are down.

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