U.S. homeownership is expected to fall a total of eight percentage points by 2015 from levels recorded in 2005, according to an analysis by John Burns Real Estate Consulting.
The firm noted that the homeownership rate peaked at roughly 70 percent in 2005, but will make its way down to 62 percent by 2015.
The sluggish economy will also add to housings’ woes, as the propensity to form households will slump thanks to poor consumer confidence and tighter than normal mortgage credit.
Yes, banks and mortgage lenders have toughened up and don’t allow everyone to buy a house anymore.
These cyclical trends are expected to dent homeownership by 3.0 percent.
However, these trends will be partially offset (+0.7%) by an aging population, whose propensity to purchase a home as they age increases until they reach their 70s.
This drop in homeownership again supports the argument to buy rental property now, as we’ll be a nation of renters for the foreseeable future.
2025 Can’t Come Soon Enough
Of course, it’s only a matter of time before the homeownership rate battles back.
John Burns sees homeownership returning to 67.1 percent by 2025, with 70 percent of those previously foreclosed on becoming homebuyers again.
Banks and lenders will probably take a more prudent approach, though only time will tell what bombshell will develop in the future.
The firm also expects mortgage rates to rise to between 6-7% over time, and home prices should rise at approximately the same rate as incomes.
So it’s certainly a good time to consider buying a home if you’re in it for the long haul. Just be patient and know that trying to time the absolute bottom of the housing market is nearly impossible.
Also note that making your move while all the doom and gloom is out there is the best time to buy because by the time the good news surfaces, you’ll have missed your golden opportunity.