Home ownership in record plunge

http://money.cnn.com/2008/01/29/news/economy/home_ownership_vacancies/index.htm

Home ownership in record plunge
Fourth quarter saw biggest one-year drop in since tracking began in 1965 - as mortgage problems and rising foreclosures take their toll.

By Chris Isidore, CNNMoney.com senior writer
January 29 2008: 1:40 PM EST

Foreclosures soared in 2007 with 405,000 households losing their homes.


NEW YORK (CNNMoney.com) -- The housing and mortgage meltdown caused the biggest one-year drop in the rate of homeownership on record, according to government figures released Tuesday.

The decline, while expected, is yet another indication of the housing market's sudden and dramatic turn.

The Census Bureau report showed that home owners accounted for 67.8% of occupied homes in the fourth quarter, down 1.1 points from a year earlier. It's the largest year-over-year drop recorded in the report.

"It's an incredible story," said Dean Baker, co-director of the Center for Economic and Policy Research. "We're back to where we were in 2002, which is before the subprime nuttiness and run-up in prices. And it's not clear how much farther we're going to fall."

I know we aren't at the bottom yet, so I wouldn't buy either. I'd rent until I saw some signs of recovery.

Why anyone would buy now, I have no idea.

But if a person is a homeowner who wants to sell a home and buy another, that would obviate most of the gains.

It also depends upon where one lives. It will take a while for the contractions to shake through the entire country.

my zipcode has had growth in the last 7 quarters, and trust me, the local civic association newsletter doesn't let you forget it. They've posted a list of all the homes sold and how long they were on the market. A number of them were on the market 1-3 days-- one was on the market for 640 days but it was an extremely dilapidated mansion. The prices have plateaued in the last few months--I am fearing when the bust is going to find it's way over here.

If I get it wrong please correct me.

During the height of the Republican Great Depression, 200 US families a week were losing their homes (I think I heard this on the Thom Hartmann show). Now assuming the 405,000 families losing their homes happened evenly through out 2007, it means about 7,789 families a week lost their homes in 2007.

In 1931, the US population was about 125 million so 200 is about 0.00016% of the total population. Today's population is about 300 million so 7,789 is about 0.0026% of our current population. That is about 1,525% more families losing their homes then during the Great Depression. Something very serous and very bad is happening here and I don't think people realize it.

What has happened here is people got suckered in to buying a home they could not afford to begin with. I don't know who should take the majority of the blame though, the buyer, the paper writer or the investment bankers packaging these deals like candy.

It seems farms and homes with some amount of land were doubling in price overnight. People were buying up land and farms like there was no tomorrow frequently with nothing down and under very bad terms expecting to make an overnight profit. I read where one banker said if you could breath, you could get a loan to buy land, especially in the midwest and southwest.

Actually the current situation sounds worse because we are talking about homes and not farms. I don't know but it all is very, very bad. Where are theses over 7,000 families a week going?

I don't believe there is any data out there (yet) to tell us how many people are truly "losing" their home, and how many are walking away from their mortgage because they owe more than the house is worth. You don't need to feel sorry for the latter group -- they're making a personal decision not necessarily related to their ability to pay. Decisions about how to "help" would be easier if we knew the percentages of each group.

http://latimesblogs.latimes.com/laland/2008/01/a-tipping-point.html

a very large share of the foreclosed property are spec homes- that is, they were built as an investment, with the profit being realized when the home is sold. but now they aren't being sold.
more people are losing their investment and their credit ratings than their homes.

of the population that were losing their homes during the Great Depression that would be 24,960 a year. But 405,000 homes a year were foreclosed in 2007. Assuming they didn't have spec homes and people walking away from homes because they simply lost equity during the Great Depression, that would mean that in 2007 about 94% of the foreclosures were spec homes or people walking away from valueless homes. Does 94% sound right?

I have a hard time believing that only 6% of the foreclosures in 2007 are families losing their homes and going bankrupt. And that number is just to match the percent of the population losing their homes during the Great Depression.

i said that "a very large share", and i'll say now probably most of of the foreclosures in 2007 did not represent a family losing their home. but i doubt that it's anywhere near 94%. it would only have to be 51% to qualify as "most".

somebody who realizes the damn parallels. Oy, Hoover must be SO PROUD!

however, the pain and the accountability seems to always fall on the people at the bottom

In this age of credit, some losing their homes had not invested any money at all! Often, they got a check on closing. They only lose the same thing as a renter, a roof, if the walk out. This scenario is new.

That said, there are a lot of real loses happening too. Many have other causes, like lack of health insurance. The number losing homes represents more than one cause.

before the Great Depression. But most people today think these risky loans are a new thing. They are not. Loans under very bad terms were very common in the 1920s. They called it land speculation back then.

Like I said, anyone who could breath could get a loan to buy land and when people started falling behind in their payments, banks began to go bankrupt.

rate was below 50% back then: http://www.census.gov/hhes/www/housing/census/historic/owner.html

If you look at the ownership rate of 47.8% in 1930 and 43.6% in 1940, there was a 4.1% change over 10 years. The fact that we just experienced a 1.1% shift in a single year is pretty sobering when looking at that, although the difference in the total home ownership between then and now might make the comparison a little funny.

If you calculate the drop in home ownership as a proportion of the number of people who own homes, it dropped 8.8% in the 1930s, and 1.6% last year.

Obviously, it would only take a few years in a row like the one we just had to match the drop in the Great Depression. It would be interesting to see the year-by-year numbers from that era to see what the pattern was: maybe it dropped farther and rebounded at the end of the decade? Who knows. If anyone has an economics background I'd be interested in hearing what you think.

As long as you are "renting" it from the lender, you are always a few missed payments away from "losing" it...just like when you "buy" a car, and then don't make payments..

Many people are simply walking away from homes in which they have little, no or negative equity. This is one reason the financial institutions are in disarray: they are acquiring properties that they can't sell for what they are worth.

These homes are not "owned" in any traditional sense.

when I hear someone say I AM A HOME OWNER when in actually they've put down a small down payment and made one or two payments - please, stop fooling yourself

Thanks to * people have lost their dreams.

The people who RENTED expensive houses from mortgage brokers & banks..well that's another story..

But since many/most put little or NO money of their own down, they just got to live in a fancy-schmantzy house for a few years, and ruined their credit in the process.. hell.. some of them even got paid to live in them.. People who used those RENTED houses as ATMs and pulled "equity vapor" from them before the "crash" made out like bandits..

By the time they were forced out or walked away, their credit was already pretty sketchy,or they would have gotten a different kind of mortgage in the beginning.

The CRIME here is that many more McMansions were BUILT in the first place, and now stand vacant/vandalized, and a blight on the community..