Home Ownership Will Change In Days Ahead
A
couple of weeks ago we reported on how the housing bubble has
affected the economy. Let�s now take a look forward, by surmising
that a future housing turnaround occurs. What will it look like, and
how will it differ from the past? We could well see a home-price
recovery without a home-ownership recovery. And here�s why:
Investors (pools of credit-worthy individuals who wish to become
landlords) are the biggest change now underway, regarding today�s
home purchases. So if prices rebound, the home-ownership rate, which
peaked at 69% in the third quarter of 2006, will likely keep
falling. The rate is presently 65.4%, but John Burns, president of
John Burns Real Estate Consulting, anticipates it hitting 62.9% by
2015 � the lowest since records have been kept. Burns claims there
is no way we�re going back to the 69% peak, because many first-time
buyers during that boom weren�t qualified to own the homes they had
purchased.
The lower home-ownership rate will have broad economic implications,
because home equity will be a less-critical part of household wealth
in the future. But on the positive side, fewer, less-leveraged
individual homeowners will pose less risk to banks and taxpayers who
backstop housing. Another positive effect from rising prices will be
a boost in construction, as recent new-home sales showed unsold
inventory at its lowest since the early 1960s. In short, a
home-price recovery without a home-ownership recovery is a definite
possibility.