By Margaret Kelly
RISMEDIA, June 15, 2011—The homeownership rate dropped to 66.4 percent in April 2011, the lowest it’s been since 1998, according to the U.S. Census Bureau. Some would argue this means owning a home is not as important to Americans as it once was—but they’re wrong.
What it really means is that the artificially stimulated level of 69 percent in 2005 wasn’t sustainable. Today’s level is merely a return to a more normal rate.
The dream of homeownership is as strong as ever, and it deserves protection—not more regulatory roadblocks.
Understandably, government leaders are looking at ways to avoid another housing crisis, but prohibitive down payments and elimination of the Mortgage Interest Deduction (MID) are two highly detrimental steps in the wrong direction at the worst time.
Consumer confidence took a considerable hit during the past few years, and its gradual recovery is still very fragile.
An unprecedented number of recent and current homeowners has been rocked by the downturn—and prospective buyers are shaken on the sidelines. But there hasn’t been so much damage that people have abandoned their dream of owning a home.
According to a Pew Research Center study conducted in April, 81 percent of adults surveyed either somewhat agree or strongly agree that buying a home is the best long-term investment a person can make. Of homeowners whose homes have lost value during the downturn, 82 percent still favor owning a home. And 81 percent of renters aspire to own a home in the future.
These survey results are compelling enough, coming straight from consumers. But in case there’s any doubt about whether there’s still an interest in buying, recent home sales and pricing data show that buyer activity is picking up.
In all 54 metro areas tracked in the RE/MAX National Housing Report, home sales increased by no less than 9 percent from February to March 2011—the third-straight month of gains. And 35 of those markets also experienced price increases. Would we see these results without increased buyer demand? Of course not.
Investor activity has picked up considerably over the past six-plus months, with 22 percent of home sales linked to this influential buyer group. But investing alone can’t be expected to absorb the millions of foreclosed properties yet to be released to the market.
Right now, government leaders should focus on ways to keep qualified buyers motivated. Not everyone will purchase a home, but those who save and prepare should know, absolutely, that it’s attainable.