For the past decade, the homeownership rate in the United States has been declining. A new blog post from the Joint Center for Housing Studies takes a look at how much foreclosures have contributed to the declining rate and if a lower number of foreclosures will ease the downward pressure on the homeownership rate.
The number of completed foreclosures reached its peak in 2010, and while it has declined from there, the number is still above pre-crisis levels. In 2015, about 670,000 foreclosure sales, short sales, and deed-in-lieu transactions took place. In 2010 that number was 1.4 million, but from 2000 to 2004 it only averaged 228,000 foreclosure completions per year.
After a detailed analysis of bucket loads of data, Jon Spader comes to two conclusions offered by the findings. First, the estimates suggest that foreclosure-related homeownership exits explain about half or more of the decade-long homeownership rate decline. The second conclusion is that, because foreclosures seemed to play a large role in the declining homeownership rates, they are likely to continue to put downward pressure on the homeownership rate until the current foreclosure inventory clears and the volume returns to a normal level.
However, it was not just foreclosures that played a role in the decline of home ownership rates. A big factor that is completely independent of foreclosures is the sluggish rates of homeownership entry among younger households, something that will play an integral roll in homeownership rates in over the next few years.
For a detailed look at the analysis and to view accompanying graphs and charts, follow the link below.