The end of the American Dream?

The end of the American Dream? Fall in housing market is worst since Great Depression

By Daily Mail Reporter

The American dream of home ownership has felt its biggest decade-by-decade drop since the Great Depression, according to new 2010 census figures released Thursday.

The analysis by the Census Bureau found the home ownership rate fell to 65.1 percent last year.
While that level remains the second highest decennial rate, analysts say the U.S. may never return to its mid-decade housing boom peak in which nearly 70 percent of occupied households were owned by their residents.

The end of a dream? Home ownership has felt its biggest drop since the Great Depression

The reason: a longer-term economic reality of tighter credit, prolonged job losses and reduced government involvement.

Unemployed young adults are least likely to own, delaying first-time home purchases to live with Mom and Dad. Middle-aged adults 35-64, mostly home owners who were hit with mortgage foreclosures or bankruptcy after the housing bust in 2006, are at their lowest levels of ownership in decades.

Measured by race, the home ownership gap between whites and blacks is now at its widest since 1960, wiping out more than 40 years of gains.

'The changes now taking place are mind-boggling: the housing market has completely crashed and attitudes toward housing are shifting from owning to renting,' said Patrick Newport, economist with IHS Global Insight. "While 10 years ago owning a home was the American Dream, I'm not sure a lot of people still think that way.'

He noted the now-diminished roles of mortgage buyers Fannie Mae and Freddie Mac, which for decades at the urging of government helped enable loans to borrowers with poor credit, many of them minorities. In a shift, the Obama administration earlier this year said it would move from a long-time government focus on promoting home-ownership for all and instead steer people with low incomes toward renting where appropriate.

Congress has been considering whether to eliminate the federal tax deduction for home-mortgage interest, a popular incentive to home-buying that's been in place since the early 20th century.

Given depressed housing values that could continue for at least another four to five years, it now makes more sense in most cases to rent than own, Newport said.

Nationwide, the home-ownership rate fell to 65.1 percent — or 76 million occupied housing units that were owned by their residents — from 66.2 percent in 2000. That drop-off of 1.1 percentage points is the largest since 1940, when home-ownership plummeted 4.2 percentage points during the Great Depression to a low of 43.6 percent.

Since 1940, the number of Americans owning homes had steadily increased in each decennial census due to a mostly booming economy, favourable tax laws and easier financing. The one exception had been 1980-1990, when ownership remained unchanged at 64.2 percent.


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