Homeownership Rate Falls Again
According to the Commerce Department, the U.S. homeownership rate fell a seasonally adjusted 63.6% in the first quarter of 2016, the third lowest figure recorded since 1995. Mortgage rates continue to remain historically low at around 3.67%, but Americans seem to prefer renting as opposed to buying, especially now that housing prices increase.
Efforts by government sponsored enterprises (GSE), like Fannie and Freddie, and federal agencies, including the Federal Housing Administration (FHA), to increase the U.S. homeownership rate seem to be failing. In fact, the current homeownership rate of 63.6% is slightly lower than what is was in 1968 at 63.9%, despite billions of dollars in taxpayer subsidies supplied to these agencies.
Federal government intervention in the housing market has failed to make the American dream of owning a home a reality for many families, but has instead succeeded in undermining housing market stability as we saw occur in the most recent financial crisis. The federal government’s decision to direct the FHA to back risky mortgage loans and support Fannie and Freddie’s decision to purchase risky mortgages has done more harm than good.