American “Nightmare” Shocker: The Real US Homeownership Rate Has Never Been Lower

| |

Top Tier Gear USA


The transformation of the American Dream, most broadly manifested in popular folklore as the aspiration of the US middle-class to own a home (even if it means agreeing to a 30-year loan with one’s friendly neighborhood TBTF bank), into the American Nightmare, in which an entire generation (the Millennials) is locked out of purchasing a home due to over $1 trillion in student loans hanging over every financial decision, an abysmal jobs market (for everyone but college educated “waiters and bartenders” whose hiring is on a tear), and banks’ unwillingness to lend money to anyone that can fog a mirror, and forcing millions of Americans to rent instead of buy, has been duly documented here before.

As we showed most recently in October, the officially reported US homeownership rate, after peaking during the first housing/credit bubble, has been plunging in a straight line and is now the lowest since 1994.

The offset: soaring, record high rents, because since few can afford the debt to purchase a still massively overpriced housing market, the only option is renting at which point the laws of supply ande demand kick in.

We have also shown in the past why the “American Dream” is now anything but. The answer in one word: Millennials.

* * *

All of the above is well-known.

What however not at all known, is that just like the unemployment rate’s major methodological revision several decades ago, so too the homeownership calculation has been “adjusted” in recent years with the consequence of making it appear better than it is.

To normalize for this revision, Bank of America ran a simulation on the US Homeownership rate, in which it “derived a homeownership rate assuming household weights by age group as of 1994. In other words, we only allow for the change in the homeownership rates over time to matter, holding the household age weights constant. Under this methodology, the homeownership rate would have declined to 62.1% last year.

In other words, instead of the most recently announced 63.9% homeownership rate, which was already the lowest since either 1983 or 1994 depending on how one looks at it, when stripping away the adjustment “fudge” which added some 2.3% to the homeownership rate simply because US households have aged, the real homeownership rate is far worse than what everyone believes.

As Bank of America summarizes, “this suggests that the decline in the homeownership rate thus far has been even more dramatic than the published data suggest.

It does indeed, and as the chart below shows, when stripping away the now traditional assumption fudges which have flooded every single data set and made virtually all the New Paranormal data meaningless due to its reliance on pre-Lehman crash demographic and labor participation assumptions, the reality is that not only is the American Dream now completely over, but that the American Nightmare has never been worse, because as BofA just calculated, the real US homeownership rate has never been lower!

Delivered by The Daily Sheeple

We encourage you to share and republish our reports, analyses, breaking news and videos (Click for details).

Contributed by Tyler Durden of Zero Hedge.

Wake The Flock Up! Please Share With Sheeple Far & Wide:
  • I have to chuckle every time I check the own box on a questionnaire where they ask if I rent or own my home, because they don’t ask if it is a van:-)
    I’m waiting for the big bubble burst that will devalue all real estate to the point where it was at the end of the Great Depression, when someone bought an entire block in Manhattan for an ounce of gold. Talk about appreciation!

    • Mike

      lol, good plan

  • Joe Lizak

    Only in America do they consider a person with a 30 year mortgage a home owner.

    The percentage of people owning their own home free and clear , with no mortgage…… I will venture a guess? Probably about 25%….probably…..and those people are most likely 50 years old or older. This new generation with student loan debt? Forget-a-bout-it….they are toast. They will be living in a used van down by the river.

    • Mark

      Right again!

      Dr. E. Michael Jones latest book draws on history to show how usury destroys people and nations. This fact has escaped even people who claim they are suspicious of what they have been taught in government schools and told on talmudvision.

      Here’s a pre-publiction review:

      Here is the book:

      • Joe Lizak

        One reason the west and especially the jews hate Arabs and Muslims is because in the Arab world usury is forbidden. Through their religion usury is not allowed. This one simple Arab rule throws a huge monkey wrench into the banksters evil plans. However, today, I don’t think Arabs can escape usury no matter how hard they try.

        • sharonsj

          Yes, but the Muslims found a way around that. They just don’t call it a loan or interest, they give it another name and then it’s okay.

    • Nexusfast123

      Not just the US. In Australia if you have a million dollar 30 year mortgage you are considered a home owner (makes me laugh). The same demographic event is occurring in all Western societies.

  • Real Home Ownership is at ZERO since 1913

  • Nexusfast123

    Not surprising with the succession of bubbles….drive up asset values, suck in the chumps, collapsed bubble, dispossess the masses of their assets….rinse, wash and start again with another bubble to further concentrate asset (house) ownership in fewer and fewer hands. The 1% end up with 99% of everything.

    • Mark

      …99% of everything… EXCEPT THEIR ETERNAL SOULS.

      • Nexusfast123

        They will get them as well – greed has no limits it seems.

  • Joe Lizak

    You are probably right on 5% with no mortgage. The popular thing now is for older folks to do a “reverse mortgage” on their home thinking they’ll have money until the end of their life. My neighbor did this. He’s 76 years old and guess what? He’s looking for a job. So even when someone pays off their mortgage the scam artists (Henry Winkler the Fonzi and that other guy who was a Senator/actor) convince seniors to re-mortgage their homes with the promise of free money only to find out there are fee’s, insurance premiums to pay and other landmines they put out for you to step on.

  • SomeTruthOutThere

    Even if you are fortunate enough to have paid off your mortgage, you are still paying property taxes. Buying land just gives you the right to pay for it forever. If I own it, I should not pay anything.

  • Mike

    The problem is even once you pay your mortgage off, you still don’t truly own your home or property because you have to continuously pay taxes on it.

  • sharonsj

    If the average person is broke after paying basic bills, or can only find a low-paying job, they will never afford a house. Aside from certain cities and industries that are still doing well, the smaller towns are full of for sale and for rent signs. And we all know the official unemployment rate is a lie. I read that IBM is firing 150,000 people and replacing them with foreign workers. And the oil industry just let go about 10,000.

  • Anothereno

    Have you seen the size of most new houses? They are all MASSIVE 1500 Square feet or more, I’ve seen quite a few people lose their home because the bank told them they could afford it, truth is a good amount of people should really only take out a mortgage for a third of what the bank offers.. Go buy that giant house and struggle to save money to go on vacation, give the banks more money when you rack up your credit card at Christmas etc OR buy within your means, go on trips, have money to buy presents and some reserve, just because a house is bigger doesn’t mean its better… I’m not saying make a “Tiny Home” just buy something that you can afford when you or your partner lose your job or take time off to have children etc…