Why home ownership rate has not picked up the pace
when Real Estate transactions are soaring? In this article Lawrence Yun, Chief Economist of
the National Association of Realtors explains to us some of the reasons why
home ownership rate is still falling in this hot real estate market.
Home buyers have emerged and home sales have been
pushed higher. Existing home sales rose by 9 percent in 2012 and are higher
still by another 9 percent in 2013 year-to-date. New home sales – always the
more cyclical figure – increased 20 percent in 2012 and are up 5 percent in
2013 year-to-date. Many REALTORS® have indicated that sales transactions would
be even higher if there were a greater inventory of homes.
While buying activity remains solidly higher, the
nation’s homeownership rate continues to trend down. The latest homeownership
rate of 65.0 percent in the first quarter of this year is the lowest since
1995. More home sales yet falling homeownership rate: what’s going on? Could it
be the investors are eating up everything in sight?
The data clearly shows investor activity picking
up since 2011, after having fallen big time from 2005 to 2010. Another reason
for rising home sales yet falling homeownership rate is the legacy impact of
foreclosures. When a first-time homebuyer buys a distressed property, there is
no net increase in the number of homeowners, though a home sale has occurred.
Currently, there are 1.6 million distressed homeowners still in the foreclosure
process and nearly all will switch into being renters. *Source: Lawerence Yun National Association of
Realtor Chief Economist
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