Housing Crisis Still Lingers for Many
The housing market has made huge strides after facing one of its worst downfalls in history. But a large segment of the middle class is still struggling when it comes to home ownership.
Read more: Affordability Takes a Hit in 2nd Quarter
“The lopsided recovery has shut out millions of aspiring home owners who have been forced to rent because of damaged credit, swelling student loans, tough credit standards, and a dearth of affordable homes,” The Wall Street Journal reports.
About 200,000 to 300,000 fewer U.S. households are buying a new home each year, Ken Rosen, chairman of Fisher Center of Real Estate and Urban Economics at the University of California at Berkeley, told The Wall Street Journal.
“I don’t think we are in a normal housing market,” says Lawrence Yun, chief economist at the National Association of REALTORS®. “The losers are clearly the rising rental population that isn’t able to participate in this housing equity appreciation. They are missing out on [a big] source of middle-class wealth.”
Many economists have been predicting that the home ownership rate will start to increase this year. The rate had plunged to a five-decade low of 62.9 percent in the second quarter. Not everyone sees the rate rising in the future, though. In fact, some economists say the rate could fall to 58 percent – or even lower – by 2050, according to Arthur Acolin of University of Southern California, Laurie Goodman of the Urban Institute, and Susan Wachter of the Wharton School at the University of Pennsylvania.
“Long-term declines could erase gains made by middle-class Americans since World War II,” The Wall Street Journal reports. “Owning a home provides protection against rising rents and has been a key component of retirement saving and wealth creation.”
Indeed, “the default savings mechanism for American households has been home ownership,” Wachter says. “Today we have historic lows for young households in terms of ownership so they’re not getting on this path.”
Source: “Lopsided Housing Rebound Leaves Millions of People Out in the Cold,” The Wall Street Journal (Aug. 11, 2016)
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