WASHINGTON – The American dream of homeownership has felt its biggest drop since the Great Depression, according to new 2010 census figures released Thursday.

A Census Bureau analysis found that the homeownership rate fell to 65.1 percent last year. Although that level remains the second-highest rate at the end of a decade, analysts say the U.S. may never return to its mid-decade housing boom peak in which nearly 70 percent of occupied households were owned by their residents.

The reason: a longer-term economic reality of tighter credit, prolonged job losses and reduced government involvement.

Unemployed young adults are least likely to own, delaying first-time home purchases to live with Mom and Dad. Middle-aged adults 35-64, mostly homeowners who were hit with mortgage foreclosures or bankruptcy after the housing bust in 2006, are at their lowest levels of ownership in decades.

Measured by race, the homeownership gap between whites and blacks is now at its widest since 1960, wiping out more than 40 years of gains.

“The changes now taking place are mind-boggling: The housing market has completely crashed and attitudes toward housing are shifting from owning to renting,” said Patrick Newport, economist with IHS Global Insight. “While 10 years ago owning a home was the American Dream, I’m not sure a lot of people still think that way.”

Advertisement

He noted the now-diminished roles of mortgage buyers Fannie Mae and Freddie Mac, which for decades helped enable loans to borrowers with poor credit, many of them minorities. In a shift, the Obama administration earlier this year said it would move from a longtime government focus on promoting homeownership for all and instead steer people with low incomes toward renting where appropriate.

Nationwide, the homeownership rate fell to 65.1 percent — or 76 million occupied housing units that were owned by their residents — from 66.2 percent in 2000. That drop-off of 1.1 percentage points is the largest since 1940, after homeownership plummeted 4.2 percentage points during the Great Depression to a low of 43.6 percent.

In Maine, the homeownership rate was 71.3 percent in 2010, the sixth-highest in the country.

Since 1940, the number of Americans owning homes had steadily increased in each once-a-decade census due to a mostly booming economy, favorable tax laws and easier financing. The one exception was 1980-1990, when ownership remained unchanged at 64.2 percent.

Broken down by state, 41 states have seen declines in home ownership since 2000, many of them in the South and West where foreclosures were more common. They were led by South Carolina, Alabama, Florida, Mississippi and North Carolina. On the other end of the scale, states with higher shares of vacation homes owned by affluent baby boomers saw small increases in ownership, including New Hampshire, Hawaii, Alaska and Vermont.

 


Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.