Home ownership, in percentage terms, has not been this low since 1997. The irony is that the prices of these homes are also falling. Does this mean that since prices are low, more people will be eager to buy, which will raise prices, leading to more construction? I don't think so. The supply and demand formula has been compromised by government intervention, which has complicated the equation beyond recognition.
This is what Bloomberg had to say about the drop in home ownership in the first quarter of this year:
The rate dropped to 65.4 percent from 66 percent in the fourth quarter and fell a full percentage point from a year earlier, the Census Bureau said in a report today. That is the lowest level since the first quarter of 1997, and down from a record 69.2 percent in June 2004. Mounting foreclosures are displacing borrowers, while a lack of inventory has kept home sales from accelerating amid record affordability, the National Association of Realtors reported April 19. Stricter mortgage standards are also limiting purchases as rental demand surges, said Paul Diggle, property economist with Capital Economics Ltd. in London.
The solution to the housing crisis is not an easy one. I believe the solution must come from the private sector...and the belief that home ownership is a goal, not a right that should be provided for us.
