Drop in US homeownership rate the greatest since the Great Depression

The title of this post is what the headline for this AP story should say – instead, the AP headline is “Census: Housing bust worst since Great Depression.” The problem with the headline is this: do people know what a “housing bust” is? Does this mean that the American housing market is in the worst shape that it has been since the Great Depression? Is the homeownership rate or are housing values at the same level as the Great Depression? Not necessarily. Here is what the story really is:

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

The analysis by the Census Bureau found the homeownership rate fell to 65.1 percent last year. While that level remains the second highest decennial rate, 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…

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, when homeownership plummeted 4.2 percentage points during the Great Depression to a low of 43.6 percent.

So the percentage drop is what is important here: it fell from nearly 70 percent in the mid-2000s to 65.1 percent today. This is similar to the 4.2% drop during the Great Depression. But notice: the homeownership rate in 1940 was 43.6 percent while it is still above 65% today. Overall, we are ahead of the 1940 figures even though the homeownership drop suggests that this recent period has had a similar effect on homeownership as the Great Depression.

Another interesting piece of news from this Census data on homeownership:

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.

This is not good. The homeownership rate for blacks and Latinos increased small amounts from 2000 to 2010 but the gap has widened. Perhaps the American Dream, at least the homeownership part, has never truly really been available to everyone.

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