23 July 2019

Homeowner Rate Falls to a Level Seen in ’94

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The U.S. homeownership rate fell to its lowest level in 20 years at the end of 2014—a level last seen when national leaders embarked on a broad push to expand homeownership in the mid-1990s. Estimates published Thursday show that, after adjusting for seasonal factors, 63.9% of U.S. households owned their homes in the fourth quarter, a rate last recorded in 1994, according to the Commerce Department. Homeownership hasn’t fallen below that level since 1988. The rate stood at 65.1% at the end of 2013.

The report showed that household formation grew over the past year at the fastest pace since 2005, according to J.P. Morgan Chase, which could indicate that an improving economy is finally encouraging more young Americans to strike out on their own.

The homeownership rate has fallen steadily since 2005, when it peaked at 69.2%. That followed a decadelong campaign to expand homeownership, launched by President Bill Clinton in 1995 and embraced by President George W. Bush in the early 2000s.

Rampant real estate speculation and loose lending standards inflated housing bubbles across the country, and when prices collapsed, millions of Americans faced foreclosure, triggering the financial crisis. Over the past year, President Barack Obama and other administration officials have voiced alarm that lending has gone from one extreme during the bubble—too loose—to the other—too tight—in the aftermath of the bust.

Officials have walked a fine line to prevent a return of the reckless loan products and practices that allowed the bubble to inflate 10 years ago while loosening some standards elsewhere to provide broader access to home buyers without strong credit or big down payments.

Click here to access the full article on The Wall Street Journal. 

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