Fourth quarter 2010 homeownership, homeowner vacancy and rental vacancy rates are in from the U.S. Census Bureau.
The nationwide homeownership rate for Q4 2010 was 66.5%, down slightly from 66.9% in the previous quarter and the peak in 2005 of nearly 70%. The current homeownership rate is closing in on the pre-boom level of 64% for the ‘80s and ‘90s.
While homeowner vacancy rates (vacant homes held out for sale to buyer-occupants) increased to 2.7% in Q4 2010 from 2.5% in the previous quarter, residential rental vacancies declined nationwide to 9.4% in Q4 2010 compared to 10.3% in the previous quarter, a significant drop. [For more information on homeowner vacancy rates, see the December 2010 first tuesday article, Nobody’s home: California’s residential vacancy rates.]
first tuesday take: National housing market data almost always vary dramatically from California numbers. As all savvy agents well know, real estate is local, and looking at solely national numbers is non-instructive at best, deceptive at worst.
In this case, the nation’s homeownership rate is indeed dissimilar from California’s — while national Q4 2010 numbers report the nation’s homeownership rate at 66.5%, California’s Q4 2010 homeownership rate is currently substantially lower at 55.4% – and dropping, probably closing on 50% before the bottom is reached.
Despite the divergence of California and national homeownership numbers, both are trending downward. Thus, homeownership levels are returning to pre-boom stability nationally as well as in California. All this is heralding a much needed return to real estate fundamentals devoid of the political economics encouraging tenants to become the homeowners they are not fit to be. [For more information on homeownership rates in California, see the July 2010 first tuesday Market Chart, Annual homeownership rate in California.]
Even a brief look at both California’s and the nation’s homeownership rates over the last ten years provides a clear picture of the tumultuous roller coaster ride that is the real estate market. A snapshot of homeownership in 2005, when homeownership rates were at their zenith, shows an alarmingly high volume of homeownership (nearly 70% nationally, 60% in California) — an example of the unsustainable excesses producing the Millennium Boom. Excess sales volume and pricing always precede an inevitable and precipitous decline in home sales volume and prices as we have experienced and are still struggling with today and for the foreseeable future.
As homeownership returns to a more sustainable and healthy level (traditionally 64% nationally, 55% for California), nearly matching the rates of the ‘90s, the last thing the real estate market needs is the increased fervor of another irrational boom. Excess levels of homeownership interfere with job advancements and, in turn, one’s standard of living.
This means every player in the new real estate paradigm, most essentially real estate agents and brokers as industry gatekeepers, must move forward with a reverence and appreciation for the current level of real estate sales volume (with prices adjusting at the rate of consumer inflation) as a sustainable real estate market trend. This trend appears to be a window to our future — at least until all jobs lost in California after 2007 are recovered, most likely by 2016. [For a detailed analysis of the new real estate paradigm, see the May 2010 first tuesday article, Looking through the window towards recovery: a real estate paradigm shift Part I and Part II.]
Re: “Q4: Homeownership rate falls to 1998 levels” from the Calculated Risk Blog
