After eight years of historically low interest rates, and with the unemployment rate having fallen to a point near what experts consider to be full employment, it would be logical for home ownership to be at an all-time high.
It’s not. In fact, it was recently at its lowest level in 50 years.
In 2016, there were nearly a million fewer homeowners in the U.S. then there were in 2006, even while the number of households rose by 7.5 million, according to “Homeownership in Crisis: Where are We Now?“ a new report from Rosen Consulting Group and the Fisher Center for Real Estate & Urban Economics.
If the housing market had returned to normal levels by 2016, according to the report, more than $300 billion would have been added to the national economy, which would have boosted growth in gross domestic product by 1.8%. In other words, instead of the anemic 2% growth we’ve experienced over the past eight years, growth could be exceeding the 3.3% average.
As recently as 2004, 69.2% of Americans owned homes. As of 2016, only 63.4% were homeowners. While there are recent signs of improvement, why has home ownership been so low?
The Housing Bubble
Many factors had an impact, as we noted when we wrote about the housing market a couple of years ago. Ironically, a major one was the government effort to increase home ownership.
The Community Reinvestment Act (CRA), which became law in 1977, was meant to encourage lenders to make more mortgage loans to low-income Americans. While the CRA initially helped many struggling Americans become homeowners, over time it morphed into an abandonment of lending standards.