Tag Archives: headline

Drop in US homeownership rate the greatest since the Great Depression

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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.

Misleading Chicago Tribune headline about Illinois foreclosures being up 18% in August?

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Here is a prominent headline featured on the front of the Chicago Tribune‘s web page early yesterday: “Illinois foreclosures surge nearly 18% in August.” Based on the headline, this sounds like bad news for the Illinois housing market. However, if you read into the story, the news isn’t all bad and perhaps some of it could even be interpreted as being good:

Illinois home foreclosure activity rose 17.6 percent in August compared to the previous month…

The filings represent one in every 424 housing units in the state. That rate is almost 26 percent lower than in August of last year and eighth-highest nationally.

RealtyTrac says the increase in many states likely is due to lenders resolving paperwork processing problems that had delayed many foreclosures. And it may signal more bank repossessions in coming months…

The number of U.S. homes that received an initial default notice — the first step in the foreclosure process — jumped 33 percent in August from July, foreclosure listing firm RealtyTrac Inc. said Thursday.

The increase represents a nine-month high and the biggest monthly gain in four years. The spike signals banks are starting to take swifter action against homeowners, nearly a year after processing issues led to a sharp slowdown in foreclosures.

There are a couple of trends going on here. First, foreclosures may be up nearly 18% from July 2011 to August 2011 and this sounds bad. But, compared to last August, the rate of foreclosures is down just over 25%. Isn’t this good news for Illinois homeowners?

The second trend is that it appears the rate of foreclosures might be picking up because lenders may now be moving more quickly against residents behind in their payments. This would be bad for these residents but might also be good as it means that foreclosures might be more quickly removed from the market rather than dragging out the process and having a longer negative effect on nearby housing prices.

I know headline space is limited understanding the nuances about this particular foreclosure statistic seems quite important. The news about a “surge nearly 18%” will catch people’s attention but there has to be a better way in the headline to reflect what is behind this number.

Racial makeup of some (read: one) suburbs being changed by foreclosures

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The suburbs are growing increasingly diverse (evidence here, here, here, and here). And this news story shows that foreclosures in the Detroit area may be helping minorities move to suburbia:

The foreclosure crisis made it possible…

Many of the foreclosed upon Southfield [Michigan] homes were going for $40,000 to $60,000. The median home value dropped from more than $190,000 to below $130,000 over the same period, according to Census figures.

With so many empty houses available, rents also dipped by hundreds of dollars. Renters increased from about 13,100 in 2006 to 15,400 in 2009.

The lure of low prices to Detroiters was obvious — as was the likelihood that their arrival would not be without issues.

“Blacks, like all Americans, want good schools and a safe community, and they can find that in the suburbs,” says Richard Schragger, who teaches local government and urban law at the University of Virginia…

Two things irritates me about this story. First, it seems to be based entirely on some anecdotal evidence from Southfield, Michigan. Is what is described in this article taking place in other metropolitan regions? The story provides little insight beyond this one Michigan community.

Second, the headline seems to highlight foreclosures but the real story seems to be about what happens when poorer Blacks move into the suburbs. The article says the result of this may be that more middle- and upper-class Blacks will continue to move to more far-flung suburbs. Should we conclude that foreclosures in certain areas are actually good for some people or do they change communities too much? The original headline, “Foreclosures helping change color of some suburbs,” is more ambivalent but when the AP story gets repeated in other sources, such as the Daily Herald, the headline changes: in the web edition, the headline is “Foreclosures accelerating changes in suburbs,” while the print edition has the headline “Foreclosures changing the suburbs.” The story says little beyond the Detroit area and yet the new headlines suggest foreclosures are leading to these specific changes throughout all (or most) American suburbs.