Homeownership rate may continue to drop

(Salt Lake Tribune) The rate of homeownership is forecast to keep tumbling in the next decade to lows not seen since the 1980s, a trend that could redefine a key element of the American dream even after the housing market recovers.

The percentage of households that own homes hit a peak of almost 70% in 2004 and 2005. By the second quarter of this year, that slipped to 67.4%, according to the Census Bureau. Now, a University of Utah analysis projects it'll drop to about 63.5% by 2020 -- the lowest since 1985.

"It will fall steadily by about half a point per year," says Arthur C. Nelson, director of the university's Metropolitan Research Center. "We'll have far more renters in the future."

Homeownership has long been viewed a key to building stable communities and middle-class families. Federal policy encouraged it with tax credits and government-backed mortgages. Now, demographic changes, strict mortgage rules, energy-saving policies and lessons learned in this housing crisis are driving more people to rent.

About 57 percent of the 30.3 million housing units added from 2005 to 2020 will be rentals, Nelson says.

"So many of our federal and state and local policies are driven by the assumption that homeownership is inherently preferred over renting," he says.

The housing collapse may have an impact.

Original Article