Even though loan rates continue to call so too do homeownership rates. The U.S. Census Bureau this past week that the nation’s homeownership rate fell to 66% in the fourth quarter, continuing a seven-year drop from a fourth-quarter peak of 69.2% in 2004. Why the downturn with the low rates? Unlike five years ago no one can qualify or afford a loan. The banks have made the process so daunting for many potential homebuyers that they simply continue to rent. We have seen first hand an abundance of buyers’ frustration at qualifying for loans.
The other crowd (the people paying cash both investors and homeowners) continue to make a strong push in buying many of the short sales, REOs and regular sales.
With REOs still on the radar, California still maintains one of the highest REO rates. Perhaps the bankers will move into these foreclosed homes and the homeownership rate will increase.
As far as prices here in San Francisco, home prices dropped 5.5% from October 2010 and 1.9% from this past November.
Many economists consider this point the “bottom”. We expect the local Bay Area market to continue to be soft until at least 2013. Of course many pockets will up tick slightly and other areas will continue to see slight drops.