BluefoxToday blog : Homeownership ratio drops, apartment demand grows

Homeownership ratio drops, apartment demand grows

It’s hardly a surprise that the homeownership number continues to backpedal in today’s wobbly real estate market and tight mortgage milieu. Single-family house


Foreclosures mercilessly push borrowers from their homes and this trend seemingly will continue for several more years as another 5-6 million homeowners could face the same fate. The recent $25 billion controversial settlement with mortgage loan servicers over alleged shady practices will predictably lead to home loan lenders accelerating court filings on delinquent borrowers. Mortgage money is very affordable but helps little when strict underwriting standards erode borrower approval chances. Inventory levels in many housing markets – like Las Vegas - are low keeping home buyers on the fence.


The Census Bureau reported that U.S. homeownership rate declined to 65.4% in the first quarter, tumbling a full point from the same time period a year ago. In comparison, it clocked in at 69.2% in the second quarter of 2004, an all-time record. In fact, it hasn’t been this far down since quarter one in 1997. Looking at historical metrics and present economic and housing trends it appears the number will settle somewhere between 60 – 64% when this turmoil comes to an end. Some real estate industry authorities claim it’ll stay there for a long time, too.


The apartment industry is one housing sector that is taking all this in with open arms. People rent because they have to save longer for the required down payment. They have to get their credit score to where it qualifies them for a mortgage loan, so they rent. Foreclosed borrowers need a roof over their heads. Many just want to see the residential market to improve from where it is now before jumping in.


According to Reis, Inc. – a New York commercial real estate information boutique – apartment vacancy rate in U.S. slipped to 4.9% in the first quarter which is the lowest since 2001. With supply slow to catch up to the increased demand a steady upward pressure on rents will undoubtedly make apartment management firms tally up nice profits. Soon, though, more apartments and other rental units will be introduced to the housing marketplace to balance things out.


Obviously a fundamental shift is underway in the housing and mortgage industries that will keep policy makers in Washington on their toes for the foreseeable future.




Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst - syndicated mortgage, housing and property management blog
My cell: 702-499-1006

Comment balloon 8 commentsEsko Kiuru • May 05 2012 12:51PM


This happened in the 70s when interest rates increased * it will take 5 to 7 years for homeownership to become a "desire" again....many renters are actually landlords elsewhere who could not sell their former home

Posted by Wallace S. Gibson, CPM, LandlordWhisperer (Gibson Management Group, Ltd.) almost 6 years ago

Esko, RENTING is the wave of the future despite what you hear from REALTORS. Don't listen to REALTORS lol. The stats don't back up what they say. There is a place in the market for both owning and renting but the scales have decidedly tipped toward renting from what people do with their money and what is being built.

Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) almost 6 years ago

We are seeing a huge surge in new apartment complexes going up in our area.  I think the secret is out.  Thanks for the insight.


Posted by Patricia Puckridge, GRI, CRS, ABR, PHP, SRES, Keller Williams ( almost 6 years ago


That's an interesting point about many renters being landlords elsewhere for the obvious reason.

Posted by Esko Kiuru almost 6 years ago


Maybe it's healthy for the housing market that homeownership settles somewhere in the low 60s.

Posted by Esko Kiuru almost 6 years ago


The apartment demand is there in many regions, like yours, and also here in the D.C. metro area.

Posted by Esko Kiuru almost 6 years ago

So not surprised Esko!  Here we have a GROWING number of investor owned properties which should be worrysome to the investors themselves!

Posted by Renée Donohue, Las Vegas Real Estate Broker - (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) almost 6 years ago


Investors are having fun in Vegas with the low prices but, like you said, there is some serious risk involved.

Posted by Esko Kiuru almost 6 years ago