Homeownership Drops More Than Any Time Since Great Depression

Mortgage Rates Continue to Hit Record Lows as Well

by Jennifer Case on October 7, 2011

The effect of the housing market crash continues to be felt, but new statistics measuring its decline help put it in a greater historical context. Figures released by the Census Bureau have put the 10-year period of 2000 to 2010 as the worst decade for homeownership since the 1930s. The news comes in the same week that rates for 30-year fixed rate mortgages reached record lows.

According to the U.S. Census Bureau, by April of 2010, homeownership in America fell to 65.1 percent, a drop of 1.1 percent from the rate 10 years previous. Compared to the 10-year period starting in 1930 in which the rate dropped by 4.2 percent, the recent decline seems fairly manageable.

Unfortunately, the numbers can be a bit misleading. The housing market didn’t fall to pieces in 2000, unlike the Great Depression, which saw its beginning with the stock market crash of 1929. The homeownership rate in 2000 actually rose for some years, reaching nearly 70 percent in 2004, before falling. The fall from then to 2010 is actually a fall greater than 4 percent in a period of about 5 years.

When divided by region the American housing market is worst in the West, where the homeownership rate is at only 60.5 percent. This is due in part to the fact that Nevada has consistently been the state with the highest foreclosure rate in the nation. The lowest homeownership rate by state, however, is the 53.3 percent found in New York.

For anyone lucky enough to be looking for a new home, the time may never be more auspicious. The downward spiral of housing in market has caused mortgage rates to drop as well. According to Freddie Mac, the average rate of a 30-year fixed rate mortgage for the week ending on October 6^th was 3.94 percent. This is the lowest the number has been since the agency began keeping records of it in 1971.

“It’s hard to imagine how long-term, 30-year fixed-rate mortgages could go lower than they are right now,” said Frank Nothaft, Freddie Mac’s chief economist, “These are the cheapest rates we’ve ever seen.”

To add a little context to just how low 3.94 percent is, in August of 2003, the rate stood at 5.83 percent while in that same month in 1987, the rate was a whopping 10.21 percent.

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