{"id":110764,"date":"2009-12-23T19:02:25","date_gmt":"2009-12-24T00:02:25","guid":{"rendered":"http:\/\/blogs.wsj.com\/economics\/2009\/12\/23\/mind-the-gap-why-ny-fed-economists-expect-homeownership-rate-to-keep-falling\/"},"modified":"2009-12-23T19:02:25","modified_gmt":"2009-12-24T00:02:25","slug":"mind-the-gap-why-ny-fed-economists-expect-homeownership-rate-to-keep-falling","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/110764","title":{"rendered":"Mind the Gap: Why NY Fed Economists Expect Homeownership Rate To Keep Falling"},"content":{"rendered":"

After rising for a decade, the U.S. homeownership rate peaked at 69 percent in the third quarter of 2006. Over the following two and a half years, as home prices fell in many parts of the country and the unemployment rate rose sharply, the homeownership rate declined by 1.7\u00a0percentage points. The current decline in the homeownership rate is approaching in magnitude the 2.3 percentage point decline observed in the early 1980s. How much more will it fall? To address this, a trio of New York Federal Reserve Bank economists — Andrew Haughwout<\/a><\/a>, Richard Peach<\/a>, and Joseph Tracy<\/a> — propose the concept of the \u0093homeownership gap\u0094<\/a> to gauge the downward pressure on the homeownership rate.<\/p>\n

They define it as the difference between the official homeownership rate and a recomputed rate \u0096 the \u0093effective homeownership rate\u0094 that excludes owners who are in a negative-equity position, meaning that the value of their houses is less than their outstanding mortgage balance. Such homeowners are likely to become renters soon, the economists reason.<\/p>\n

Their estimate of this gap suggests that the measured homeownership rate will likely experience significant downward pressure in the coming years. \u0093The current severe house price cycle, combined with borrowers who had little or no equity at origination of their mortgages, has led to a dramatic rise in homeowners with negative equity and, therefore, a large gap between the measured and effective homeownership rates. In some of the worst hit metropolitan areas, effective homeownership rates are 25 to 45 percentage points below the measured rate.”<\/p>\n

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After rising for a decade, the U.S. homeownership rate peaked at 69 percent in the third quarter of 2006. Over the following two and a half years, as home prices fell in many parts of the country and the unemployment rate rose sharply, the homeownership rate declined by 1.7\u00a0percentage points. The current decline in the […]<\/p>\n","protected":false},"author":850,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-110764","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/110764","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/850"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=110764"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/110764\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=110764"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=110764"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=110764"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}