Homeownership Rates Up. Is That All Good News?

Filed under: Market Comentary

A report came out yesterday regarding homeownership rates. These rates have been on a steady include over the last several years. It got me wondering: last time we hit a peak in homeownership was 2006, and we all know how that ended! So, where are we heading from here.

Differences Between 2006 and 2020

This is another opportunity to point out some major differences between now and 2006. So many of the new homeowners that were buying in the runup to the crash last time were using wacky mortgage products, literally creating homeowners that should never have been buying homes.

Today’s statistics are very different, because they are being driven by different factors: really low interest rates and every home buyer is fully documenting their income. The majority of home buyers are doing it with a 30-year fixed mortgage. So, they aren’t going to see any big surprises in payments.

Current Homeownership Statistics

Homeownership has been steadily increasing over time, but the recent reports show a big jump in homeownership. The report for 2nd quarter of 2020 came out at 67.9% homeownership, compared to 65.3% in first quarter of this year. That’s a really big increase in a short amount of time, especially when you consider historical standards.

It’s easy to think that we are going to ride a crazy real estate wave again. But I see it differently this time. As long as people go into this with a long-term perspective, there are great opportunities. Ride it out and view homeownership the way it’s meant to be: a long-term play, amortize the mortgage away, and work towards having a mortgage-free home by retirement.

Do you have questions about your mortgage? Are you ready to join the ranks of homeowners? I’m always here to help. Contact me to learn more about your financing for this purchase.

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