Homeownership Plunges At Record Rate

The rate of homeownership fell at an unprecedented one-year rate to levels not seen since early 2002. Blame a housing hangover from the boom market and the mortgage meltdown.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - The rate of homeownership is the latest casualty in the nation's economic crunch.

A one-two combination -- a housing hangover and the mortgage meltdown -- dropped the rate of homeownership by its largest ever one-year decline.

The U. S. Census Bureau said compared to one year ago, the fourth quarter 2007 rate of 67.8 percent represents the largest annual decline in the rate of homeownership since the bureau began tracking the rate in 1965.

Hit hardest was the West where the rate was down to 62.7 percent followed by the Northeast 64.6 percent; the South, 70 percent and the Midwest, 71.7 percent.

The national fourth quarter rate is also as low as its been since the first quarter of 2002. The rate of homeownership peaked at 69.2 percent in the second quarter of 2004, but has been edging down ever since.

Tight mortgage money conditions makes it tough to land the mortgage you need to buy a home, but affordability also remains a big factor.

A recent Center for Housing Policy report found that in 2007 home prices declined in more than three quarters of the 201 metro areas it studied. However, police, firemen, teachers and other community workers still can't afford the median priced home in their community.

Some 40 communities have home prices that require more income to buy in 2007, than in 2006. In Birmingham, AL home buyers need 18.95 percent more income to buy a home in 2007 than in 2006, according to the Census.

Unaffordable home prices linger from the last housing boom when home prices skyrocketed, following ever lower interest rates and easy-qualifying mortgages. First timers joined growing numbers of speculators, move-up buyers and second home buyers. A record numbers of buyers created an unprecedented boom in demand.

Not only have homes become unaffordable to buy, they've also become unaffordable to keep as mortgage interest rates reset, creating higher monthly mortgage payments. A higher mortgage bill has more than a million homeowners into foreclosure, a short sale or other form of homeownership termination.

An additional 80,000 homes sat vacant and available for sale nationwide in the fourth quarter 2007, compared to a year earlier. The 2.18 million vacant homes for sale in the fourth quarter matched a record set in early 2007.

With talk of a recession, the trend is for more terminated homeownerships and greater supplies of homes on the market.

That could mean some bargain basement discounts for some buyers. But if your homeownership is in jeopardy, talk to your lender, a financial counselor or other professional advisor who can help you keep your home.

The Deadline Newsroom offers additional stories on homeownership and related issues.

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© 2008 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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The United Metros of America

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom - Just as real estate thrives -- or doesn't -- by location, so does the nation, according to a recently announced blueprint for national prosperity.

The blueprint is designed as a new partnership with federal, state, local, and private sector leaders to strengthen metropolitan economies, build a strong and diverse middle class, and grow the nation in environmentally sustainable ways.

It isn't federal policy or a presidential campaign promise.

It's, well, metro.

And it has a strong housing component.

"We are a full-fledged Metro Nation and need to change our mental map of the United States, from a union of 50 states to a network of 363 highly connected, hyper linked, and economically integrated metropolitan areas," said Bruce Katz, Vice President and Director of Brookings Metropolitan Policy Program recently, when launching the "Blueprint For America Prosperity".

That a think tank, rather than the federal government, is launching such a bold bid to reshape the nation, is itself indicative of the nation's ills.

Brookings says more and more often, large metropolitan areas are at the forefront of social change, quickly addressing housing policies, sprawl, sustainable development, education, immigration, infrastructure, energy independence, technological innovation, global warming and a host of other pressing social concerns.

"Metropolitan areas are vital to national prosperity because they're the engines of the economy. So much of what happens in America happens in metropolitan areas," says Rey Ramsey, Chairman and CEO, One Economy Corporation a non-profit spreading technology and information to low-income people.

Eighty-three percent of Americans live in metropolitan areas, which contain 86 percent of American jobs. The vast majority -- 94 percent -- of people in the nation's 100 largest metros live and work in the same metro.

It's not surprising then, that with such a constituency, metropolitan leaders, not Washington D.C. politicos, are the ones with their fingers on the pulse of innovation and the need for both swift and long-term change.

Unfortunately, dynamic efforts on the metropolitan level are getting short-circuited by out-dated policy and procedural procrastination from a growingly more detached federal government.

Stuck on political partisanship and legislative lethargy, bogged down in war and embroiled in another national election, the slow, plodding federal government is too often ineffectual when it comes to addressing the national penchant for prosperity.

"America's metros find our national government strangely adrift, ignorant of the dynamic changes sweeping the country and the new spatial geography of our economy.

Our federal government is mostly a legacy government, a collection of ossified agencies carrying out decades-old programs and policies, through means and mechanisms suited to a pre-Internet world. As a result, our federal government is out of step with rapid change, and is failing to leverage those assets that drive secure and sustained prosperity," Katz said.

He also characterized current government's housing policies aimed at "the expansion of McMansions at the periphery of metropolitan areas, while failing to address the rapid suburbanization of poor people and employment opportunities."

While the blueprint calls for plans to fully recognize and further tap metropolitan might, it also seeks an upgrade in the federal government to foster a federal-metro partnership to put the nation back on the right track.

"A metro can focus on building its economic strengths, but its economy is profoundly influenced by federal monetary, trade, regulatory and investment practices. A metro can focus on reducing income disparities, but only the federal government can close the gap between wages and the cost of living. A metro area can focus on environmental sustainability, but only the federal government can regulate industries on a national scale," Katz said.

Following the blueprint's introduction, Katz's Brookings crew will begin identifying specific reforms for the next administration and Congress to advance key national priorities including boosting innovation and productivity, replicating the best examples of urban school reform, increasing the supply of workforce housing, improving transportation within and across metros, and making energy efficiency in our homes part of the solution to climate change.

"We are a metro nation. And now it is time to start acting like one," Katz said.

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© 2007 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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