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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (80049)	6/25/2007 10:40:20 AM
From: MulhollandDrive	Read Replies (2) \| Respond to of 306849

CR... what do you make of the household formation being down 70%? paa2005.princeton.edu Extended Abstract The 1990s saw a concerted increase in homeownership rates in most U.S. metropolitan areas, reversing the decade of stagnation observed in the 1980s (Myers et al. 1992; PD&R 2001; Simmons 2001b). While homeownership rates of the elderly have increased in every state during the 1990s, minorities and young adults struggled to keep up with the rising tide (Simmons 2001a). The increases in overall homeownership rates have been widely touted as a positive sign of housing well-being in America. However, there are two sides to the story of rising homeownership. The largely accepted one is that a larger share of households own their own homes, reflecting growing participation in homeownership and wealth building during the 1990s. The flip side of the story is that the homeownership increase may be the result of shrinking household formation. Renter households are usually the primary victim of declining household formation. The loss of renters will inadvertently increase homeownership rates, albeit in a negative way. Said alternatively, the increases in homeownership do not necessarily mean that there are more homeowners relative to the population. Facing challenges in the housing market, many people may have delayed the formation of households. Instead, they may have chosen to live with parents or some other adults. In certain circumstances, renters are so discouraged that they may drop out of the housing market entirely In these two scenarios, both population growth and owner household growth surpass the growth in the number of renter households. The increase in homeownership rates would come at the expense of renters, which does not adhere to the federal policy of expanding housing opportunities.