Have homeownership (and home prices) bottomed out?

Couple of interesting charts from Prof. Mark Perry

The home ownership rate in the US has fallen to about 65% … down from a peak over 69% during the housing boom & bubble.

Couple of observations:

  • With roughly 120 million households, that converts to about 5 million housing units … a rough indicator of how many folks bought homes that they couldn’t afford – either from the get=go or impacted by the recession
  • Big question: have we reached bottom or do we have another 1% – 1 million units – to go?  Lots of analysts are saying we’ve reached bottom … but that requires an inflection point, right?

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Note surprisingly, home prices map closely with the homeownership rate … except for the past couple of periods – with house prices trending up and homeownership still trending down.

Raises questions:

  • Is the recent home price strength just a blip that will fall back into pattern?
  • Or, are home prices a leading indicator that we’ve reached bottom?

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