The Homeownership Bubble - An Economic Crisis Explained
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I continue to be mesmerized by analysis of U.S. Homeownership Rates. The data clearly:
- Establishes when the Housing Bubble began
- Reveals a point of origination where a reasonable person would begin to search for an explanation for the spike in homeownership
- Highlights how dramatic the inflection point was
- Demonstrates the extraordinarily steep slope of those gains
- Documents homeownership rates establishing a U.S. record of 66.0% in 3Q97
- Provides an understanding as to why housing prices began to rise at an unsustainable pace in 1997
- Contrasts the U.S. economy's supportable homeownership range of 63.5% - 65.0% with the Housing Bubble peak of 69.2%
The data also provides insight into where we are in the downturn and a perspective on when it is likely to end.
Historically the U.S. economy has supported a structurally sustainable Homeownership range of 63.5% to 65.0%. The current ownership rate is 67.3%. Due to a reversion to pre-bubble market conditions, that rate will fall at minimum to 65%. Based on an understanding of the Boom-Bust cycle dynamic, I continue to believe that Homeownership Rates will decline to below 64% over the next several years to devastating effect.
Posted by Whitney Ross at 5/5/2009 12:30 PM 
Categories: Definitive Charts, Market and Economic Predictions, Housing Market Analysis, Perspectives on Homeownership, Focus on Homeownership
Tags: Affordable Mortgage Depression Homeownership Housing Bubble
Categories: Definitive Charts, Market and Economic Predictions, Housing Market Analysis, Perspectives on Homeownership, Focus on Homeownership
Tags: Affordable Mortgage Depression Homeownership Housing Bubble
Good post...
i am linking to it in today's lineup...
http://www.housingcrisisnews.com/
(lead story)
also, via twitter...
http://twitter.com/HousingBubble
have bookmarked you & subscribed.
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I can't believe Bill Clinton declined any sort of culpability for the housing crash, when NBC fluffed, or rather interviewed him.
http://thelastgoodidea.blogspot.com/2009/02/bill-clinton-revisionist-historian.html
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Wow, an image is worth a thousand words they say! Hopefully it'll go back to a more normal rate soon, and it won't fluctuate like it shows it did during the 90s. I'm not sure Clinton, as a single person, has much to do with it though.
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If you are unfamiliar with Clinton's "National Homeownership Strategy" you don't truly understand what happened during the 1990s. Riegle-Neal, the CRA revision and HUD directed Fannie/Freddie subprime funding were part of a coordinated public policy effort to manufacture 8 million additional homeowners by 2000. The plan worked, achieved its target on schedule, and generated the Housing Bubble.
http://theaffordablemortgagedepression.com/2010/03/11/origin-of-the-housing-bubble-the-national-homeownership-strategy.aspx
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Interesting. Thanks for posting the chart. I have to say though that it wasn't so much the government's push toward "affordable mortgages" that contributed as much as "too-good-to-be-true" mortgages - ARMs that lured people away from common sense slightly more expensive but still affordable fixed rate options.
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