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Economy Nullifies Any Benefit for Apts.

The crash of the for-sale market has pulled more people into the rental pool, but the downtrodden economy is hindering any significant uptick in demand.

By Sule Aygoren Carranza | Updated on March 24, 2009

AUSTIN, TX-The turmoil of the capital markets and for-sale housing crash has impacted the rate of homeownership in the country. The US Census Bureau recently released its latest estimates of homeownership rates, which continue on a downward trend that began in 2005. The overall homeownership rate at the end of 2008 was 67.5 %, roughly the same level as in year-end 2000.

The decline in homeownership has been pretty evenly distributed across age and ethnic groups, notes Richard F. Moody, chief economist & director of research for Forward Capital LLC, the parent organization of Mission Residential. The locally based executive notes that in most cases, the deterioration over the past three years “have undone the gains in homeownership rates seen over the second half of the decade-long advance in homeownership that marked the 1995 to 2005 period.”

While economic prosperity did play a role in pushing the homeownership rate higher, the uptick had more to do with the lax capital markets, where most households generating an income could obtain a mortgage–however creative it was. Now those financing structures are coming back to haunt the industry as interest rates on adjustable-rate loans have reset.

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