Economy Watch: United States Homeownership Lowest in More Than a Decade
- Nov 03, 2010
November 3, 2010
By Dees Stribling, Contributing Editor
One thing Election Day was unlikely to change, no matter the composition of the new Congress: the sorry state of American homeownership. According to the U.S. Census Bureau on Tuesday, during the third quarter of 2010, the homeownership rate was 66.9 percent of households, unchanged from 2Q10, but also the lowest rate in more than 10 years–since the second quarter of 1999. Back in the mid-2000s, the rate hovered around 70 percent.
Then again, if there’s no other takeaway from the housing crisis of the last few years, it might be that there’s some natural upper limit on how many U.S. households can be homeowners. Many people opt out of homeownership by choice, but others simply can’t maintain the kind of income needed, a situation that was roundly ignored during the heady mortgage-making of the mid-2000s, to everyone’s woe later.
The bureau also reported that about 2.5 percent of owner-occupied houses nationwide sit unoccupied, not counting foreclosures that aren’t on the market yet, so the actually percentage is probably somewhat higher. During most of the previous decade, the the figure rarely strayed over 2 percent.
Apartment Industry Headed for Better Times
As people leave homeownership, they have to live somewhere. Thus the apartment business has been strengthening this year. The most recent Quarterly Survey of Apartment Market Conditions by the National Multi Housing Council, released Tuesday, confirms the trend.
“Just 15 months ago, apartment demand was still falling, sales were declining, equity finance was getting harder or more costly to find and debt finance was still worsening,” NMHC chief economist Mark Obrinsky noted in a statement. “In the last nine months, all four areas have been improving dramatically. Indeed, the strong responses in each of our last three quarterly surveys indicate widespread improvement throughout 2010.”
Investors have certainly noticed: the organization’s sales volume index for apartment properties has risen from 78 to a record-high 84. Moreover, some 60 percent of the respondents to the survey said that apartment markets were tighter during 3Q10 than the previous quarter. As the only income-producing property that’s likely to produce more income in the near- and mid-term, a lot of buyers want a piece of the action as vacancies decline and rents increase.
Long Recovery Still Ahead for CRE
As for the rest of commercial property, the outlook isn’t nearly as cheerful, though not quite all bad either. That’s the conclusion of the Real Estate Roundtable’s fourth quarter 2010 survey of 110 senior CRE executives, released Tuesday. Commercial real estate markets are still in for a long slog of a recovery because of dogged high unemployment, concern over government policy, and patchy capital availability, among other things.
The overall Sentiment Index dropped by one point this past quarter, to 73, but has been on a relatively flat trajectory since the beginning of the year. Asked how real estate market conditions will be one year from now, fewer respondents in the 4Q10 survey said they expect conditions to be “much better.” More respondents predicted only “somewhat better” conditions.
After several tepid days, Wall Street saw an upward bounce on Election Day, with the Dow Jones Industrial Average gaining 64.1 points, or 0.58 percent. The S&P 500 advanced 0.78 percent and the Nasdaq was up 1.14 percent.