BuzzBuzzHome Corp.
May 31, 2011
The New York Times reported this morning that in the United States housing prices fell in March to their lowest point since the downturn. According to Standard and Poor’s Case-Shiller Home Price Index, prices are now down 33.1 percent from the July 2006 peak.
And, frighteningly, David Blitzer, chairman of the S.& P. index committee told the Times that “Home prices continue on their downward spiral with no relief in sight.”
What has become increasingly obvious, though, is that not only are huge numbers of people blocked from the market (because they’re unemployed, in foreclosure, or living in homes worth less than their mortgages), but many solvent consumers are simply choosing to steer clear of home ownership. As the Times put it, “The desire to own your own home, long a bedrock of the American Dream, is fast becoming a casualty of the worst housing downturn since the Great Depression.”
Rates of home ownership are now at 1998 levels and some housing experts expect it to decline to the level of the 1980s – or earlier. In fact, Pete Flint, chief executive of Trulia expects ownership levels to rest at about 63 percent, last reached in the mid-1960s. “There was a time when owning a home was a symbol you had made it,” he told a reporter. “Now it’s O.K. not to own.”
As the article reports, people are naturally turning to other options, namely renting. The Times cites a number of experts and associations that are witness to an increase in renters. Jeffrey I. Friedman, chief executive of Associated Estates, which owns 13,000 apartments across the Midwest and South, says that they have more ‘renters by choice’ than they’ve seen in 40 years.
Still, though, the article points out that most people expect the trend to reverse itself – eventually. Douglas C. Yearley Jr., CEO of Toll Brothers, a builder of high-end homes, says that he finds that “Most people still want the big house with the big lot in the desirable school district in the suburbs. No one ever renovated the kitchen or redid a room for the kids in a rental. I think — I hope — we’ll be O.K.”
