Home Ownership Reaches Lowest Level in 46 Years

Research released by Morgan Stanley earlier this week revealed that home ownership in the United States has dropped to the lowest level since 1965. According to the report, the large decline in home ownership has a lot to do with the foreclosure crisis that is wreaking havoc on the housing market.

Morgan Stanley Home Ownership Rate Lower than Census Bureau’s

Last Friday, the Census Bureau issued a report revealing that the percentage of people who owned homes in the second quarter had dropped to 65.9 percent. This was the lowest level since the first quarter of 1998.

However, according to the Morgan Stanley report, analysts Oliver Chang, Vishwanath Tirupattur and James Egan argued that the rate of home ownership was even lower than the statistics issued by the Census Bureau.

As a matter of fact, once the analysts factored in delinquent mortgage borrowers–those who are likely to lose their homes at some point this year–Morgan Stanley determined that the actual home ownership rate is much closer to 59.2 percent.

This rate would represent the lowest since the Census Bureau began keeping quarterly records back in 1965.

U.S. Is Becoming a Nation of Renters

With home ownership rates dropping drastically, the analysts believe that many individuals and families are shifting from buying homes to renting them.

As noted in a recent CNN Money article, “The combination of falling home prices, limited mortgage credit, continued liquidations, and better rental options is fundamentally changing the way Americans live. We believe this change is only beginning and is moving the country towards becoming a rentership society.”

It may seem that the analysts are incorrect in their assessment since many people still are technically considered homeowners because they occupy their homes. But as mentioned in their report, many of these homeowners are no longer making payments, pushing them into the delinquent mortgage borrower category.

They explained home ownership is likely to remain low for some time as lawmakers work out robo-signing issues the aid in problematic foreclosures. Also, because lenders have tightened their underwriting standards, many prospective homeowners don’t qualify for a home and therefore, are likely to stick with renting for years to come.