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Saturday, November 8, 2014

Has Homeownership Lost Its Appeal?

The recent report from the U.S. Census Bureau has reported an ongoing decline in homeownership. Despite decreasing home prices and low interest rates, homeownership is currently at a 20-year low of 64 percent. The decline is highest among Generation Xers who have also been affected the most during the recent recession. 

Across the country the trend is pretty much the same, although homeownership rates are higher in the Midwest and the South. The city of Philadelphia has experienced the second-steepest decline in homeownership of the 30 most populated cities, a drop which came as a surprise to many living in the area. When questioning random people in the city about the matter, the most frequent responses were "owning a home is too much work" and "I'd rather have money in the bank (than tied-up in a mortgage.)" As a result, rental properties have benefited heavily evidenced by today's $720 median rent price, the highest amount since 2009.

As the government aims to loosen lending rules, banks are asking for tighter requirements. Despite the mixed signals, most consumers appear to be content with simply renting. Since the housing bubble, many Americans are not very confident with property ownership sensing that the economy is different from that of years past.  

For a matter that appears complicated, one can actually conclude that it's quite a simple one. The goal in making a major purchase is to buy when the time is right; therefore, the most important attribute any consumer should have is patience.  However, patience in buying may not be the mindset for the many who are turned-off from making a home purchase altogether.  

Brian L. Elliott, The Scarlet Journal
November 7, 2014, 10:56PM EDT