The "Homeownership Bubble" is Still Deflating
The Census Bureau reported yesterday that the homeownership rate in the U.S. fell to 65.9% in the second quarter of 2011 (see chart). That’s the lowest homeownership rate in slightly more than 13 years, since the 66.4% rate in QIV of 1997. Compared to the all-time peak of 69.2% in 2004, America’s homeownership rate has now fallen by more than three percentage points.
That huge run-up in home prices created an unsustainable real estate bubble that started crashing in 2007, leading to a 22% drop in home prices through the first half of this year and bringing real home prices back to their 2001 levels. Likewise, the unsustainable “homeownership bubble” started crashing in 2007 and homeownership rates are now below 66% for the first time since the late 1990s.