The American dream used to entail owning a home but has this traditional dream shifted? The U.S. Census Bureau reported that homeownership rates have dropped to 64.8% in the first quarter of 2014, which is the lowest rate since 1995. Home prices have soared and home sales have not been keeping pace as first-time homebuyers, in many cases, have been priced out of the market and are still finding it hard to gain access to credit. Investors are still playing a large role in the single-family real estate market.
Robert Shiller of the S&P/Case-Shiller Home Price Indices commented on this topic, “This institutional investor dynamic is a whole new era I think. As institutional investors start to play in the single-family market, that just changes it fundamentally.” Those who aren’t buying are renting instead which isn’t necessarily a worse scenario. Some prefer not having a large mortgage to worry about and not being saddled with repair costs when something in the home breaks down.
Trulia’s chief economist, Jed Kolko, pointed out, “Ironically, adding renter households could cause the homeownership rate to fall, even though these new rental households are a sign of recovery and will spur more construction starts.”
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