Throughout most of the three decades from 1969 to 1999, approximately 63 percent to 66 percent of U.S. households were homeowners, according to the U.S. Census Bureau. At the end of that period, the homeownership rate broke its historical bounds and climbed to 67 percent. In the next 10 years, the rate rose to 68 percent and then 69 percent.

Much of this rise in homeownership was driven by government policies. Homeowners have been rewarded with sizable income-tax deductions for mortgage interest and property tax, and the tax code also all but eliminated capital gains tax on the sale of a principal residence.

The result was a nation of property flippers who pocketed hundreds of thousands of tax-free dollars. Add an ocean of easy money and we had what looked like a lot of proud, happy new homeowners.

The people who earn their living from real property sales naturally were ecstatic: Homebuilding boomed. Realty and mortgage brokers earned some serious money. Real estate investment became profitable. And homeowners flush with equity went on a wild spending spree.

The folks in the apartment business were not so ecstatic. Indeed, they began to resemble short people at the rear of a very large crowd. They waved their hands above their heads, stomped their feet to make some noise and tried to get someone — or anyone — to listen to their message that renting a home was good, too.

Now, the homeownership rate has retreated to the 67 percent level of nine years ago. That’s still historically high, yet it’s lower than the peak and it’s enough of a dip to beg an obvious question: Is homeownership over?

The question isn’t frivolous, as the answer will affect the lives of every man, woman and child in the nation. If the age of homeownership is over, many more people will choose to live in rental housing and those who do decide to own their own home may have to learn to live with much less equity growth. If the age of homeownership isn’t over, homeowners may have cause for celebration sometime in the future. Either way, the implications for government housing policy will be profound. …CONTINUED

Both sides of the debate have called their banners. Proponents of homeownership argue that real estate is vital to the health of the U.S. economy and that the downward blip in the ranks of homeowners is just a temporary phenomenon. Homeownership may be tarnished, they might say, but beneath the grime, the concept is still golden. Just wait, they might add, and you’ll see that we’re right.

Proponents of rental housing argue just as vehemently that homeownership isn’t appropriate or even desirable for everyone and that many people are better off financially and otherwise as renters. Homeownership isn’t tarnished, they might say, it just wasn’t really all that golden all along. Just wait, they might add, and you’ll see that we’re right.

My own opinion, in case anyone wants to know, is that despite the sound and fury, the debate over whether the age of homeownership has ended may be moot. I offer this opinion not because I believe homeownership doesn’t matter, but rather because the glory days that homeowners enjoyed earlier in this decade may have been only a mirage.

Statistically speaking, the rate of homeownership appeared to spike rather dramatically, but in hindsight we know that too many of the supposed new homeowners had no equity and were set up with mortgage payments they couldn’t afford for more than a few years. They weren’t really homeowners, though we called them by that name and we counted them among ourselves.

If we eliminated those temporary homeowners from the statistics, I suspect we might discover that the U.S. homeownership rate has always been the same as it always was.

Source: U.S. Census Bureau.

Marcie Geffner is a veteran real estate reporter and former managing editor of Inman News. Her news stories, feature articles and columns about home buying, home selling, homeownership and mortgage financing have been published by a long list of real estate Web sites and newspapers. "House Keys," a weekly column about homeownership, is syndicated in print and on the Web by Inman News. Readers are cordially invited to "friend" the author on Facebook.


What’s your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story.

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