Tags: Newman | homeownership | rate | bubble

Yahoo's Newman: Homeownership Rate 'Back Where it Probably Ought to Be'

By    |   Sunday, 01 February 2015 08:02 PM

The U.S. homeownership rate has dropped to 64 percent, the lowest level in 20 years, but that's not a bad thing, says Yahoo Finance columnist Rick Newman.

"What’s really going on is the last bit of air squeaking out of a 20-year housing bubble that obscured the pitfalls of owning a home, while exaggerating the virtues," he writes.

"The homeownership rate is now back to its historical average — where it probably ought to be."

A high homeownership doesn't necessarily have much to do with a strong economy, he notes.

"It’s very clear, meanwhile, that buying a home is a huge commitment of money, and that it also locks the buyer in place for several years, at a minimum, unless taking a loss on a quick resale is no big deal."

Homeownership doesn't make sense for everyone, Newman points out. A mortgage "can be a disastrous commitment for those who are unprepared."

Nobel laureate economist Robert Shiller of Yale University doesn't see a problem with the trend toward renting either.

"Demand is shifting. It seems like we have a new urbanization," he told CNBC. "People are not so interested in these houses they [homebuilders] have built in recent years. There's more interest in renting."

To be sure, there's not a wild swing toward renting, the Yale professor said. "Let's not exaggerate. The American dream was a car and house. That will continue. On the other hand, America is an outlier on that dream. There's a lot of common sense in support of renting and taking public transportation."

Bottom line: "I'm suspecting it won't be a hugely dramatic trend, but will be a trend."

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The U.S. homeownership rate has dropped to 64 percent, the lowest level in 20 years, but that's not a bad thing, says Yahoo Finance columnist Rick Newman.
Newman, homeownership, rate, bubble
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2015-02-01
Sunday, 01 February 2015 08:02 PM
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