The rapidly inflating foreclosure numbers and the crash of the nation's mortgage market have aided in reducing the number of homeowners across the United States. The mortgage crisis and quickly climbing foreclosures has sent out a larger number of homeowners from their homes than the number of homeowners that were created during the housing boom years from 2000-2007.
According to figures released recently by the Census Bureau show that homeownership in the U.S. for the fourth quarter of 2010 decreased by 0.7% when compared to a year earlier. During the fourth quarter of 2010 66.5% of Americans owned homes Compared to 67.2% the same time a year prior. That figure is the lowest homeownership rate since the end of 1998.
During the boom years when credit was more widely available, making credit easy to obtain regardless of income or ability to repay the money loaned, homeownership rates soared to a record high of 69.2% during the second and fourth quarter 2004. Those rates remained high until the recession hit and foreclosure numbers began to climb dramatically.
The nations homeownership rate is expected to continue a decline. Some economic analysts predict the homeownership rate to fall below 65% as more and more Americans are forced out of their homes by foreclosure other financial factors. Much of the decline can be attributed to the trouble surrounding subprime mortgages. During the boom years for the housing market, lenders made it easier for borrowers to obtain loans and many borrowers chose subprime mortgages that had very low interest rates that would reset at a later date. Once those rates reset, many borrowers could no longer afford their monthly payments.
Pair that with declining home values, which are leaving homeowners owing more on their mortgages than their homes, are worth is making it easier for troubled borrowers to justify walking away from their homes.
These market changes are having a dramatic effect on minority homeownership rates. Homeownership among black-only households fell to 44.8% during the fourth quarter of 2010, down from 46% from a year prior. Hispanic homeownership rates fell to 46.8%, down from 48.4% the prior year. Each 1% decline is said to equate to 1 million households moving from their homes to rentals. With that in mind, now might be a good time to invest in rental properties.