From CNBC:
…America’s home ownership rate, after holding steady for a while, took a pretty big plunge in Q4, from 66.9 percent to 66.5 percent. That’s down from the 2004 peak of 69.2 percent and the lowest level since 1998…
…Now to vacancies. There were 18.4 million vacant homes in the U.S. in Q4 ’10 (11 percent of all housing units vacant all year round)…
This is why housing will not recover any time soon – and will likely suffer further price erosion through, at least, the end of 2012. There are just too many houses available (some sources indicate that the “shadow inventory” – homes held by banks but kept of the market – may run in to the millions of units), too many people with destroyed credit, too many unemployed and too much demographic pressure against rising prices (boomers are retiring, eg, and thus not looking to buy homes). Even when it starts to recover, don’t look for anything like rapidly rising house prices. Some areas might experience a boom from time to time, but the overall trend – perhaps for a generation – will be from flat to slightly up, with dips mixed in from time to time.
The really bad news is that the banks are at their wits end on what to do – they keep “extend and pretend” on their bad home loans (those they haven’t been able to push off on the taxpayer via TARP, that is) and hoping that that the economy will turn around so massively that housing prices will recover. But they never will – certainly not in the time frame necessary to take care of the problem. Government is clueless, too; mostly because the government actually relies upon the bankers to tell them what to do. What is needed is a complete break with the past.
In July of last year I cooked up a plan to fix things, and I still haven’t come across a better idea. Boiled down, it amounts to incentivizing banks to lease out foreclosed homes – preferably to the people they are foreclosing on – for three to five years. This gets the houses off the market, provides a revenue stream to the banks, allows the housing market to stabilize, gives foreclosed-on people a chance to rebuild their credit and generally relieves the pressure of the housing crisis. Unless and until government and the banks start doing things differently, nothing will improve in this area – and the bad news is that things will have to get a lot worse before public pressure can be developed to force government/bank action.
Just a lousy situation all around, and we’re stuck in it…
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